The Future for Clean Energy in Africa
17 juillet 2013
The latest thought leadership report produced by Clean Energy Pipeline is based upon the analysis of 140+ responses that Clean Energy Pipeline received for their survey on African renewable energy.
This report provides insight into investment and development trends in Africa's clean energy sector. The report is based on a survey of 140 senior executives, complemented with in-depth interviews with industry stakeholders from around the world.
Key findings of the report include:
Wind, solar, hydro and biomass projects will play a major role in meeting Africa's growing power needs.
Geothermal power also has potential in East Africa.
Renewable energy is a natural choice for much of Africa given its vast available resources.
Over 80% of survey respondents cited Africa´s strong wind and solar resources as a strong driver for renewables deployment.
Renewable energy is also attractive as it is relatively quick and cheap to deploy on a small scale compared with fossil fuels.
Renewables´ sustainability credentials are also a driver in some African markets.
South Africa and Morocco will account for the majority of installed renewables capacity in the short term.
Many African countries have strong renewable energy ambitions but to date only South Africa and Morocco have introduced fully fledged independent power producer (IPP) procurement programs.
South Africa intends to bring 6.9 GW of renewables capacity online by 2020 and has already awarded 2.4 GW of contracts through the first two windows of its procurement program.
Some 83% of survey respondents expect most renewables capacity to be installed in South Africa during the next five years.
African renewables projects offer great rewards but also present an additional set of risks that investors and developers may not have encountered in other markets. It is important to adopt the right long-term approach and to structure investments appropriately.Political and exchange rate risks rank highest on the list of concerns for investors in African renewable energy projects. These risks vary by country and are most acute outside South Africa and Northern Africa.
A number of mechanisms are available to mitigate these risks. These include MIGA and Export Credit Agency insurance and debt facilities from multilateral financial organizations. Debt financing for African renewables is currently quite limited. Investors need to forge relationships with local banks and international development financial institutions. The four major South African commercial banks financed almost every Window 1 project in South Africa.
Participation from international banks across Africa is rare. Projects are currently highly reliant on debt financing from multilateral financial organizations and export credit agencies. This will continue - over 90% of survey respondents believe multilateral financial and development institutions will continue to play a vital role in financing African renewable energy projects during the next three years.
Asian investors are increasingly targeting African renewable energy projects. These include Japanese trading houses and industrial corporations, the big five Chinese power companies and Chinese wind and solar equipment manufacturers. Investors from Korea and Malaysia are also exploring investment and acquisition opportunities. Asian investors typically want to invest at scale so will target African countries that have sizeable renewables procurement programs.
Renewable energy has the potential to play a major role in reducing Africa's acute power supply gap for the following reasons:
Extensive renewable resources:The prime driver for renewable energy in Africa is the continent's extensive renewable energy resources - 88% and 81% of survey participants cited Africa's strong solar and wind resources as a driver for solar PV and onshore wind development respectively.
Comparative Advantage: Much electricity generation in Africa relies on diesel fuel. With limited refining capacity on the continent and few pipeline networks, the cost of diesel powered electricity generation is high. Removing fuel costs from the equation gives renewable energy a comparative cost advantage that it does not have in countries with multiple sources of fossil fuels and developed fuel transportation networks.
Ease of deployment:Renewables can be installed much more rapidly than conventional fossil fuel generation. Solar PV also has a natural advantage over other renewable technologies in that it can be deployed on a relatively small scale - 85% of survey respondents believe that solar PV's suitability for rural, off-grid applications is a strong driver for its installation.
Sustainable: A green agenda is also driving renewables deployment. For example, South Africa has a long-term commitment to reducing greenhouse gas emissions. In 2009 the country committed to cut carbon emissions by 34% below expected levels by 2020 and by 42% by 2025.