The energy revolution of Africa

How renewables, new finance and the digital revolution are transforming the face of Africa

Sub Saharan Africa (SSA) is at the crossroads. A decades-old trend of decreasing access to power has been reversed for the first time in 2014, and the hope of a full-electrified continent in the next one or two decades has never been this close to reality. This could have a potentially revolutionary effect on the region: according to the International Energy Agency (IEA), 60% of SSA population (circa 590 million people) still lack access to power, a value which goes beyond 78% considering the rural population and which is higher than 90% for some countries (Central African Republic, Chad), with significant damages to the economy, the health and the education of the SSA population.

This change is due to a series of new factors, first and foremost the boom of renewables worldwide, which have started to offer a cheaper and fitter solution for the electricity needs of Africa. Onshore wind but, mostly, solar PV (particularly off-grid solutions) are thus behind the astonishing tripling of the electrification rate of Kenya (from 20% to 65% in just the 2012-2016 period). Yet, such a remarkable growth needs a series of measures and the support of African and international actors to consolidate this first, powerful hope for a bright Africa.

Access to power had been steadily decreasing in SSA because new generation simply could not match the population growth. This has crippled not only the development of an African industry and, generally speaking, economy, but has also undermines the vary basis of the African society: lack of power translates into hospitals whose machinery runs intermittently, often once or twice in a week. Schools without electricity cannot offer evening courses for illiterate farmers, or for the young seeking to improve their education. Pumps and mills have to run on expensive and often unavailable diesel, increasing costs for farmers and villages. Kerosene used for illumination is a serious threat to the African population. And so on.

Increasing and distributing energy access is key to address these problems, yet such a trend is far from being definitively confirmed. According to IEA forecasts, if new measures are not implemented, by 2020 this positive trend of electrification could stop and then reverse, and thus access to power will again decrease in the years to come. And so the long, dark night of Africa.

The highest growth in generation capacity in SSA has been in renewables. According to the International Renewable Energy Agency (IRENA), it has increased by 18% in three years (from 2014 to 2016), with major changes in hydropower, but also in solar PV and wind. Solar had only 136 MW installed in the whole continent in 2009, wind 1.485. In 2016 values were respectively 5.234 for solar (of which 4147 of solar PV) and 10.344 for wind – an almost fivefold and sevenfold increase.

There are global and specifically regional reasons behind this success. Renewables are now part of an energy revolution worldwide, their generation costs having fallen by 80% for solar PV and 45% for coal from 2010 and 2015 – and are now cost competitive even with coal. Renewables are also particularly fit to the African context: they have smaller economies of scale, thus they do not require the large investments many African countries have been historically able to gather for large infrastructures, such as electricity distribution networks, or highways. Off-grid solutions also offer delocalised solutions which solve the issue of the dispersion of the population on the Africa territory, which made electricity connections too expensive for the majority of the rural population.

Nevertheless, new energy technologies are not the only component of the solution. For instance, it is necessary to have shift the international development and cooperation approach from a project-based attitude, to becoming a guarantee for public and private ventures and programmes. Despite a historic dominant role of the public sector in bringing access to power, in SSA it will be instead necessary to promote a greater involvement of the private sector – the only owning the resources to deliver the capacity Africa needs. A stable regulatory framework, which also focuses on new, off-grid technology solutions, is thus fundamental to provide incentives for investments in the region.

Providing an adequate and easily accessible finance is indeed key to sustain the momentum of the electrification of SSA, and the digital revolution here can be of help. The spread of mobiles in the continent (Ghana has more mobiles per person than the United States) has contributed to the diffusion of mobile banking, thus easing payments and the profitability of expanding energy access. As many energy consumers in SSA, also from the most vulnerable strata, are now able to pay with very small upfront costs and with great ease, the energy revolution of Africa has also started to focus not only on building generation, but also on empowering African energy consumers – what will be, in the end, the key factor for the consolidation of the current expansion of energy access in the region.

More about this topic

Financing Energy Access in Sub-Saharan Africa, Nicola Bilotta, Lorenzo Colantoni
https://www.iai.it/en/pubblicazioni/financing-energy-access-sub-saharan-africa
Empowering Africa, Nicolò Sartori, Silvia Colombo, Lorenzo Colantoni
https://www.iai.it/en/ricerche/empowering-africa