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- Oops! African grids receive only 0.5% of total energy investment
Oops! African grids receive only 0.5% of total energy investment
The continent is fast creating lots of clean power – but without modern grids the impact is limited
Hello – Scratch hard enough at many of the continent’s issues and you find that missing infrastructure is a big part of the root cause.
Green energy is no different. Wind turbines and solar farms are a no-brainer. And thankfully investment in clean power is accelerating.
But for it to reach end users, Africa also needs power lines and transformers. Its grid infrastructure, however, amounts to a gaping hole… and a colossal investment opportunity.
⏳ Today’s reading time: 4 mins
LOGISTICS UPDATE | Thursday 25 April
🗃️ Report: GreenCape has published its 2024 market intelligence
🌐 Event: Cape Town hosts ENLIT energy & water summit (May 21)
💼 Job: The Nature Conservancy seeks a Director of Program Delivery
AND FYI…
🌐 Event: South Africa hosts the Devac infra summit (May 15-16)
💼 Another job: Rwanda seeks an E-Mobility Specialist for Kigali
1.🚁 Heli view: Why green energy lacks the necessary plumbing
The continent has doubled its installed electricity capacity to 245 Gigawatt over the past seven years, mostly from renewable sources. Hurrah!
Yet a big blocker remains: Reliable transmission and distribution lines to get the power to homes and businesses are sorely missing.
The context: Many renewables projects are located in remote areas, far from consumers.
Transmission lines can carry high-voltage power over long distances, but they’re costly.
Since 2014, they’ve only received 0.5% of the $41 billion invested in the continent’s energy sector.
Africa has 247 km of transmission lines per million people, compared to 610 km in Brazil and 807 km in America.
Why it matters: Grid poverty results in a lack of access and magnifies efficiency losses.
Some 17% of electricity (or double the global average) is currently lost en route.
In 2022, that totalled 152.5 TWh, enough to power 244 million people, or more than 40% of Africa's unelectrified population of 600 million.
The challenge: Infrastructure development in Africa is usually government-led. Plus, power grids take much longer to build than power plants.
New grids often require up to 15 years of planning, permitting and construction, compared to 1 to 5 years for renewables projects.
When plants are completed before grids are ready, utilities have to pay for unconsumed power.
The one-year delay in connecting Kenya’s Lake Turkana wind project cost taxpayers $134 million.
Investment needed: The majority of African utilities already struggle financially.
They are unlikely to spend the extra $18.5 billion annually required for adequate transmission & distribution.
Even though it could reduce electricity losses by 30%.
The crux: Private sector participation can play a critical role in bridging the financing gap.
But private investment in African grids is critically low.
Few countries have policies to enable such participation.
Often long-standing vested elite interests stand in the way.
A few notable exceptions: Morocco, Ghana, Zambia and Uganda have allowed private sector investment in their distribution networks.
Operators post impressive results, outperforming public utilities financially, commercially and technically, halving the efficiency losses of state-owned utilities.
New approaches: The transmission sector is starting to build on the success of independent power producers in the generation sector.
New models focus on long-term “Transmission Service Agreements”, similar to Power Purchase Agreements on the generation side.
African pioneers: Kenya created an early public-private partnership involving KETRACO, Africa50 and POWERGRID.
In Uganda, the government went into partnership with Gridworks.
Alternative solution: Extending national grids to distant rural areas is costly. Mini-grids (often fed by solar farms) are more affordable.
But most mini-grids only provide basic electricity to homes and small businesses.
Their limited capacity cannot meet the energy-intensive demands of industry.
Future trends: Transmission technology is evolving with innovation – as well as being challenged by it.
South Africa has adopted “smart grid” tech that creates a more efficient and reliable power supply.
Yet rapid urbanisation and the shift to electric vehicles will also put added pressure on grids and necessitate upgrades to handle increased loads.
2. Cheat sheet: Three cases of new grid investments plus job creation
(i) Kenya: $6.1 billion investment in grid infrastructure and distribution by 2035, with an additional $60 billion needed between 2035 and 2050. This has the potential to create 364,000 direct and indirect jobs in the power sector.
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