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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


🌐 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.

(ii) Ghana: $2.7 billion by 2035 and an additional $45 billion between 2035 and 2060. Potential to generate 245,000 jobs.

(iii) Nigeria: Investments in grid infrastructure and distribution connections will cost $135 billion up to 2060. These investments could generate up to 420,000 jobs.

3. Number of the week

is the amount required annually for Africa to adapt to climate change, says the African Development Bank. So far it only receives $30 billion.

4. Network corner

👉 Acre Impact Capital, a new private-debt impact investment manager, secures $100 million for African climate infrastructure.

👉 The World Bank plans to link 300 million Africans to electricity with a $35 billion initiative.

5. Q&A: Climate leaders with answers

Hassana Mbeirick is the CEO of Meen & Meen, which offers green economy consulting and services in Mauritania

Q.  Is the green economy taking off in the continent’s north-west? A: Energy transition in this region is very tough. Countries have poor infrastructure. Although international partners are helping, developers are more focused on how to generate profits. 

Q: In any particular sector? A: For instance in the case of green hydrogen. Africa has started to develop a supply chain that can bring sustainable development and create a platform for exports. Africa should leverage this neutral initial stage to accelerate the green transition.

Q: But there are challenges? A: It’s true that the region struggles with water scarcity. It’s a point of concern when developing hydrogen plants which rely on water for the electrolysis process. It needs addressing. 

Q: What’s being done? A: Currently, the world lacks large enough electrolysers. But Africa is on track researching how to combat water scarcity. 

6. Media monitoring

  • Football: Morocco commits $692.5 million to the circular economy for waste management in six cities ahead of the 2030 World Cup.

  • Vroom: Bolt partners with M-KOPA to launch a fleet of 5,000 electric motorcycles in Kenya.

  • Credits: Netflix, Apple, Shell and Delta tap into Kenya’s carbon market.

  • Tech: Floating solar farms could boost Africa’s energy potential.

  • Farms: The Africa Fertiliser Financing Mechanism receives $7.3 million to boost productivity.

  • Solar: Burkina Faso approves $48 million for the Donsin solar plant.

Don’t have time to read 100+ media sources every day? We’ve done the reading for you. Check out our full media monitoring here  

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