Africa Energy Gap and Opportunities

Africa’s energy systems are inefficient and inequitable. They generate high-cost electricity (around eight times the unit cost of countries in East Asia) through grids that mainly serve national elites. Africa’s rich get subsidized energy. The poor get to collect firewood, burn bio-mass and purchase charcoal.

Today, Africa has an opportunity to skip the carbon-intensive energy pathway followed by rich countries and emerging countries. Renewable technologies provide a low-cost alternative – and Africa has an abundance of renewable assets in the form of solar power, wind and rivers. However, current investment plans and energy policies have set the region on a high-carbon pathway of dependence on coal and oil. Charting a new course will require a fundamental rethink in approaches to energy investment.

Energy systems in Africa are dominated by a ‘big-grid’ high-carbon infrastructure, fueled in many countries primarily by coal. Renewable energy could turn this model on its head. Wind farms and solar parks can provide decentralized or “off-grid” power directly to customers, reducing the load on congested transmission lines. Most of the financing used to build and maintain conventional systems is public – partly because regulatory policies, pricing and long planning horizons deter private investment. By contrast, renewable energy creates investment opportunities for small, medium-sized and large companies.

With the right policies in place, a low-carbon energy transition in Africa could act as a catalyst for poverty reduction. It will highlight the potential for delivering renewable energy to the 60 percent of Africans now living without access to modern energy. 

The region’s informal settlements, with their high population density, could provide a market for innovative renewable programmes that lower energy costs for households and support the development of small enterprises. The renewable sector could become a dynamic hub for creating jobs and developing skills. In the rural sector, renewable energy could reduce the labour burden on women who currently collect firewood, generate the electricity needed to support off-farm enterprises, and improve the quality of life. Schools and health centers could benefit from reliable, affordable energy.

 

African economies need energy to pursue industrialization and not all this energy can be clean. Policies are therefore needed to guide the transition from high- to low-carbon energy.

While Africa has a small carbon footprint, many practices across the region constitute a problem. Gas-flaring is a case in point: oil companies in sub-Saharan Africa flare an amount equivalent to half the continent’s power consumption.

 

 National legislation on flaring is routinely ignored by major oil companies, reflecting the indifference of governments. Deforestation and other land-use practices weaken the planet’s carbon-absorption capacity. Far more could be done through national action and international partnership to unlock triple wins for carbon mitigation, growth and poverty reduction through improved practices.

Currently, Africa’s energy systems combine restricted access with inefficiency and high levels of inequality. This costs jobs, undermines growth and locks millions of Africans into cycles of poverty and vulnerability.

Based on 2015 Africa Progress Report.