Author: Ashley Theron
Posted on: ESI-Africa | April 11th, 2018
An energy revolution is happening in Africa where off-grid and mini-grid power generation is no longer a short-term fix, but rather a permanent solution.
New and cheaper technologies, especially in the renewable energy sector, coupled with affordable energy storage, are driving this revolution.
Bringing electricity to smaller communities through off-grid and mini-grid initiatives are happening in a number of countries around Africa, which are life-changing for especially rural communities – some of them whom now have access to electricity for the first time in their lives.
A number of African countries are moving from traditional state monopolised utilities to partnerships with the private sector for off-grid energy solutions, but challenges remain, such as incoherent energy policy frameworks that are often not attractive for private investment.
Riccardo Ridolfi, Founder and CEO of Equatorial Power, says in East Africa in particular, the main issue is a lack of the necessary regulatory framework to attract private investment.
“At the end of the day, most of these can be resolved with sufficiently strong political will, which is particularly relevant when it comes to off-grid policy. If accelerating access to productive energy is not a real political priority, then it will never gather the necessary momentum.”
Based in Uganda, Equatorial Power is developing off-grid power and mini-grid projects in the region, including Rwanda and the Democratic Republic of Congo (DRC).
“Access to energy undoubtedly represents a major opportunity in the region and, in my opinion, solving the issues around the economic viability of mini-grids is at the core of unlocking that opportunity,” Radolfi says.
Solar power gaining popularity in Nigeria
Ayodele Oni, Partner at Bloomfield Law Practice, a legal firm with extensive experience in Nigeria’s economy, agrees that there are “ample opportunities” for investment in mini-grids.
“The current opportunities in the power sector surround the potential for investment as a result of the privatisation and unbundling of the energy sector over ten years ago,” he says in reference to Nigeria’s energy sector.
“The opportunities for investment in sources of power, especially renewable energy sources, have been under-utilised in the Nigerian power industry.”
However, there has been a shift in the country’s regulatory policies whereby renewable energy is viewed as a “major solution” to the electric power challenges in Nigeria, Oni says.
“Several policies have been issued to encourage dependence on renewables, for example, incorporate provisions to increase the percentage contribution of solar energy to the total power generation mix. By so doing, the policy’s objective would be to encourage programs to facilitate solar home systems, as well as rural and industrial off-grid solutions.”
He adds that this “shift” in policies will inadvertently favour solar power generation.
Favourable policy frameworks
Another favourable policy framework on the continent – in the West African nation of Togo – has enabled private investment to take off.
UK-based utility company BBOXX has for example partnered with the country’s Union Togolaise de Banque to raise capital for its endeavours to bring electricity to more than two million citizens by 2020.
The majority of Togo’s citizens live in small villages in rural areas and the country, located on Africa’s west coast, imports energy from neighbouring countries to meet the electricity demand for its population of more than seven million people.
In December 2017, the government of Togo awarded BBOXX a contract to roll out 300 000 of its solar home systems in the country in the next two years.
“This way of raising capital through a local bank has made financial matters more straightforward,” says BBOXX CEO Mansoor Hamayun. “It is exciting to see that under the right framework private companies can operate effectively and scale up operations.”
“For too long barriers have been preventing distributed solar businesses from growing and developing. But with the right framework in place, we can break down these barriers. I believe data and technology can act as a springboard to leapfrog traditional expensive grids and opt for smarter grid solutions, and truly transform Africa’s utility sector from the ground up,” he says.
Intra-regional trade and cooperation paramount
Although the establishment and expansion of off-grid and mini-grid systems will go a long way in addressing chronic energy shortages and unreliable electricity supply on the continent, many energy experts also believe that more extensive
cross-border power trade and inter-country collaboration are needed to ensure Africa for the viability of new energy generation and to bring down electricity prices.
Says Daniel Njoroge Butti, Energy Economist at Karatina University, Kenya: “One way in which tariffs can be reduced is by leveraging the various power pools on the continent, such as the Eastern Africa Power Pool and the Southern Africa Power Pool. Henceforth there is a need to have a continental energy master plan if we are to make Africa the frontier of choice.”
His views are echoed by Omar Vajeth, Head of the Project Advisory Unit and Senior Transaction Advisor at the Southern African Power Pool. “Regional grid integration will bring further benefits for reducing cost and stimulating economic activity between countries,” he says.