Africa is facing an energy trilemma: how to make sure that the energy supply is sufficient, affordable, and sustainable. The continent is trying to industrialize and develop at the same time that the world is trying to decarbonize – and the African population is set to boom. The good news is that the African continent has enormous renewable energy potential, but fully tapping into it will be as challenging as it is necessary.
At present, 600 million people across the African continent still lack access to energy. While energy production is increasing, so too is the population, and therefore the demand. It is projected that by 2050, one in four people on the planet will be in sub-Saharan Africa. As the population grows and the region industrializes, African energy demand is expected to increase by a third over the next ten years. Meeting this projected energy demand will require a ten-fold increase in power generation capacity by 2065.
The need is enormous – but so too is the opportunity. The continent is prime real estate for solar, wind, hydropower, and geothermal energy production. In response to this opportunity for market development, international interests have been flocking to the African energy market trying to get an early foothold in what is certain to be a rapidly expanding industry. For years now, Russia and China have been facing off for dominance in emerging African energy markets, and now Europe’s fast-growing need for solar energy is increasingly pushing European developers into the Sahara in search of sun and vast tracts of land.
But international development experts say that the development of the African energy sector needs to come from within Africa at the national level. A recent opinion piece by Sebastian Sterl, a Senior Research Associate at the World Resources Institute, identifies 5 key challenges for African leaders to solve this energy trilemma and take control of their own clean energy development:
The real cost of renewables
While renewable energies have proven to be competitively cheap elsewhere in the world, this won’t necessarily be the case in Africa. According to Serl, “the relatively high risks that investors assign to most African countries, as compared to the rest of the world, mean they demand a higher return to justify investments. This means power plants must charge customers a higher price per kilowatt hour to break even.” Solving this challenge will require a strategic approach to de-risk these investments so that energy remains within reach for cash-strapped consumers.
This challenge is far from unique to the African continent. No matter where you are in the world, the sun doesn’t shine 24/7, and the wind isn’t always blowing. Wind and solar power are produced according to the whims of the weather, unlike fossil fuels which can be produced and consumed according to demand patterns. Variable energy therefore puts an added strain on electrical grids, and requires resilient and smart grids able to handle the waxing and waning of supply and demand sides that don’t always match. On the whole, African countries lack this kind of infrastructure. Many African grids are already underperforming, and doubling down on wind and solar without properly supporting and developing them could worsen issues of energy security rather than improve them.
Matching supply and demand
Around the world, the financial success of power utilities depends on large commercial and industrial customers with reliable demand. This poses a challenge in countries where these sectors are underdeveloped. “Many sub-Saharan African countries lack a strong industrial base,” writes Serl. “Meanwhile, utility companies need to connect a high number of low-consumption customers whose electricity bills will be low. All of this needs to happen while electricity prices remain affordable.” This will pose a major challenge, as industrial growth requires a strong grid, and a strong grid requires a strong industry. Major policy support and economic incentives will be necessary to turn this vicious cycle into a virtuous one.
“Leapfrogging” fossil fuel use
Africa will need to electrify and substitute fuels in order to decarbonize, but consumption of fuels is really just beginning in Africa. Many homes still rely on biomass and industrialization is just beginning. Thinking past what is normally the next phase of development – an increased consumption of fossil fuels and increased gas-powered transport to create a strong economy – will therefore require new ways of conceptualizing the green energy transition. This is also an ethically tricky area, as many leaders in the developing world feel that their countries should have the opportunity to develop their economies – like the developed world already did – before being asked to kickstart a green energy transition that they can’t afford.
Oil and gas
The African continent is home to oil and gas reserves that could provide an essential kickstart to local economies. Many African leaders insist that they should be allowed to capitalize on this without pressure from nations that have already gotten rich off of their own fossil fuel reserves and are now ready to decarbonize. But like the ethics of this situation, the economics of this are not so cut and dry either. As the world moves away from oil and gas, African nations “could be at risk of being left with stranded assets if they invested in new oil and gas infrastructure.” Furthermore, studies show that developing African oil and gas will not solve Africa’s own energy poverty. What’s so galling is that 89% the liquified natural gas infrastructure being built in Africa is to be exported to Europe to bail them out of their addiction to Russian gas,” Joab Okanda, Christian Aid’s Pan African Advocacy Advisor said at COP27 last year. “We cannot be Europe’s gas station. Otherwise, we will crash the climate.”
Nowhere is the importance of decarbonization more obvious than in Africa. Seven out of the ten countries most vulnerable to climate change are located in Africa, and, therefore will be disproportionately impacted by each additional ton of carbon dioxide equivalent released into the atmosphere. The injustice of this situation can’t be overstated: historically, Africa has contributed just 3% of global greenhouse gas emissions. But allowing African nations to have their turn to pollute freely is clearly not a solution.
Africa is in a unique position heading into a very uncertain era for the global energy sector, creating major policy planning challenges. But if the challenges highlighted above are all accounted for and properly planned around, the continent could capitalize on a major clean energy opportunity. The timing is right for Africa to change its narrative from victimization to climate leadership and resilience.
By Haley Zaremba for Oilprice.com
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Before the Ukraine conflict when energy was readily available at affordable prices, the West has been ignoring Africa, forgoing any investments in its energy sector and calling for keeping African hydrocarbon resources underground.
In fact, US Special Envoy to Climate Change John Kerry called last year on African countries not to develop their hydrocarbon resources because they would become stranded assets by 2030. He advised them to reduce emissions instead and that is for a continent whose contribution to global emissions in 2021 was 3.8%, the lowest in the world.
Now when the need arose for more gas and oil supplies from Africa in order to replace Russian oil and gas supplies, the EU and Western oil and gas companies rushed to Africa.
What Africa needs urgently is sufficient, affordable and sustainable energy to overcome a huge and chronic energy poverty with 600 million people still lacking access to energy and this means developing its oil and gas resources.
For Africa, decarbonisation is a very low priority. It is a luxury better left to Western countries. Its top priority is to develop oil and gas resources and enhance production to satisfy its peoples’ growing demand for energy.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert