On June 30, 2013, U.S. President Barack Obama announced a “Power Africa” initiative to double access to power in sub-Saharan Africa, intended to assist the population of sub-Saharan Africa, more than two-thirds of who lack electricity. That rate rises to more than 85 percent of people living in rural areas.
According to a White House press release, “Power Africa will build on Africa’s enormous power potential, including new discoveries of vast reserves of oil and gas, and the potential to develop clean geothermal, hydro, wind and solar energy. It will help countries develop newly-discovered resources responsibly, build out power generation and transmission, and expand the reach of mini-grid and off-grid solutions.”
The Power Africa initiative builds on Obama’s Presidential Policy Directive (PPD) on Sub-Saharan Africa, “New U.S. Strategy Toward Sub-Saharan Africa,” announced on June 14, 2012.
The PPD says Africa could be “the world’s next major economic success story” and in a measure of its importance, it represents the first time that promoting U.S. trade and investment has been a cornerstone of a PPD on sub-Saharan Africa.
Providing increased electricity to six million Africans will not come cheap; according to the International Energy Agency, sub-Saharan Africa will require more than $300 billion in investment to achieve universal electricity access by 2030.
But the business potential in renewable energy in Africa is immense, given that Africa is home to seven of the 10 fastest growing economies in the world, as other countries besides the U.S. enter the African energy market.
In an example of rising foreign investment in Africa’s renewable energy markets, on May 15, a consortium led by British company Globeleq officially launched two solar power plants in the Northern Cape. The De Aar and Droogfontein facilities represent a combined investment of $290 million.
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Speaking at the inauguration of the two sites, South African Deputy Science and Technology Minister Michael Masutha said, "The Department of Science and Technology (DST) is focusing on setting up the necessary systems to support the sustainable solar energy industry. This is done through supporting research, development and innovation in the energy sector, informing and influencing energy policy decisions, and supporting human capital development."
The De Aar and Droogfontein solar photovoltaic plants, each containing more than 165,000 photovoltaic panels, were constructed under the government's Renewable Energy Independent Power Producer Procurement Program (REIPPP).
The South African Department of Energy notes about its REIPPP program, “South Africa has a high level of Renewable Energy potential and presently has in place a target of 10,000 Gigawatt hours of Renewable Energy. The minister has determined that 3,725 megawatts to be generated from Renewable Energy sources is required to ensure the continued uninterrupted supply of electricity. This 3,725 MW is broadly in accordance with the capacity allocated to Renewable Energy generation in IRP 2010-2030. This IPP Procurement Program has been designed so as to contribute towards the target of 3,725 megawatts and towards socio-economic and environmentally sustainable growth, and to start and stimulate the renewable industry in South Africa.”
Droogfontein Solar Power General Manager Mark Pickering said, "We are proud to be one of the first private power producers established in terms of government's Integrated Resource Plan, which encourages a diverse range of supply technologies to meet the country's future electricity needs, reduce its carbon emissions and make a positive impact on local communities. Education and training are vital if we are to unlock the potential of this new industry and best utilize South Africa's abundant solar resources. To this end, Droogfontein Solar Power will be devoting the bulk of its social economic development budget to support education."
South Africa’s development of solar power represents a significant governmental shift away from its traditional power generating fuels. According to the U.S. government’s Energy Information Agency, in 2012, 72 percent of South Africa's total primary energy consumption came from coal, with oil accounting for 22 percent, followed by natural gas (3 percent), nuclear (3 percent), and renewables (less than 1 percent, primarily from hydropower).
South Africa's energy sector is critical to its economy, the second largest in Africa, only recently overtaken by Nigeria. South Africa has the world's ninth-largest amount of recoverable coal reserves and holds 95 percent of Africa's total coal reserves.
The De Aar and Droogfontein solar photovoltaic plants represent only a portion of the REIPPP plans for solar power in South Africa, which is now soliciting bids for the eventual construction of solar facilities with a total output of 1,450 megawatts.
Washington is not overlooking South Africa; the U.S. department of Commerce in its “Renewable Energy Top Markets for U.S. Exports 2014-2015” report noted, “South Africa is typically the first African market most American exporters consider when developing an export strategy. Its energy demand growth and economic vitality make it an attractive destination, as well as a base for future projects in other African markets.”
Farther afield, Washington sees great opportunity in Africa’s hunger for electricity. On May 17, U.S. Secretary of Commerce Penny Pritzker headed to West Africa with a delegation of 20 American companies on a five day Energy Business Development Mission, visiting Ghana and Nigeria in an effort to promote U.S. exports to Africa by helping American firms launch or increase their business in the West Africa’s energy sector.
Among the companies accompanying Pritzker are executives from General Electric, Hightowers Petroleum Co., Intermarine LLC, MacLean Power Systems, PW Power Systems, SolarReserve, Symbion Power LLC and Unified Electrics LLC.
Given Africa’s power potential, expect to see many similar trade missions in the near future, all seeking a slice of that $300 billion pie.
By John Daly of Oilprice.com