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Sub-Saharan Africa, the region with the lowest universal access to energy, needs $350 billion in investments, one-fifth of which needs to be off the grid, to achieve universal electricity access by the end of this decade, Wood Mackenzie said on Thursday.
According to the African Development Bank Group, more than 640 million Africans have no access to energy, which corresponds to an electricity access rate for African countries at just above 40 percent, the lowest in the world. Per capita consumption of energy in sub-Saharan Africa, excluding South Africa, is 180 kWh, compared to 13,000 kWh per capita in the United States and 6,500 kWh in Europe, the bank group says.
Electrifying Africa is one of the big challenges ahead for the energy industry, and the way it is being pursued could shape the next generation of the business models of power companies, according to WoodMac.
“The future of energy may be forged in Africa,” said Benjamin Attia, a principal analyst with Wood Mackenzie’s Energy Transition Practice.
“The evolution of sub-Saharan Africa’s utility business model, both on and off the grid, will fundamentally reshape the trajectory of global electricity demand and will be essential to the energy transition,” Attia added.
The persistent lack of electricity access in Africa is partly due to massive underinvestment in infrastructure so far, according to WoodMac. In addition, a large part of the utilities in Africa are operating at a loss and do not have the capital to expand and improve the power supply.
Faced with these challenges, Africa could take advantage of the decline in the costs of renewable energy and of innovative business models, Wood Mackenzie said.
“Decentralised, bottom-up, solar-and-storage grids could not only transform sub-Saharan Africa’s energy future but carry important lessons for the next generation of thinking on utility business models globally,” WoodMac’s Attia said.
Africa is estimated to have massive potential for 1,000 GW of solar power. Its actual installed capacity as of 2020, however, was barely 10.58 GW.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.