Realising a renewable energy dream
24 juillet 2013
Power Engineering International - Penny Hitchin
Access to power is vital for both social and economic development. However, sub-Saharan Africa (SSA), a vast area containing nearly 50 diverse countries with a combined population of over 830 million people, is the region with the lowest global per capita access to electricity.
Seven in ten people have no access to electricity and with population growth outpacing electrification, there is no sign of the gap closing. By contrast, investment in telecommunications infrastructure is racing ahead and the number of mobile phone connections in SSA is increasing at the fastest rate in the world, with over 650 million connections.
SSA's energy consumption is tiny in comparison to the rest of the world. The African Development Bank calculates that 48 sub-Saharan countries have combined installed generation of only 68 GW, of which 40 GW belongs to South Africa (population 50m). As well as low access, SSA's electricity supply is plagued by under capacity, poor reliability and high costs.
Africa is one of the continents most vulnerable to the impacts of climate change because of its high dependency on agriculture and the water shortages already affecting it.
SSA has significant hydrocarbon energy resources for electricity generation but they are unevenly distributed. Coal is mined in South Africa and Zimbabwe. Nigeria, Angola and a number of other countries produce oil while Mozambique and Tanzania have gas reserves.
With 12 per cent of world population, Africa is responsible for just 2.4 per cent of world emissions. South Africa, Tanzania, Kenya, Uganda and Nigeria all have high emissions intensity, but the overall low figure results from energy poverty rather than deployment of clean energy.
Central and Eastern Africa have good hydropower resources, especially DRC, Ethiopia and Cameroon, but droughts have had a significant impact on hydro-electricity generation. Several East African c ountries - Kenya, Djibouti, Eritrea, Ethiopia, Kenya, Tanzania and Uganda - have access to potential geothermal energy from the East African Rift Valley.
Southern Africa has excellent wind power potential and much of SSA receives high solar irradiation. While the region has the natural resources for renewable energy generation capital, infrastructure, skills and governance are required in order to develop a stream of projects.
South Africa is in the top ten global coal consumers and is the 13th biggest emitter of carbon dioxide. Electricity consumption in South Africa has been growing rapidly for over 30 years fuelled largely by indigenous coal supplies with some gas, hydro and nuclear power. Its electricity supply system is underfunded and over stretched and winter blackouts are not unusual.
A 2003 White Paper laid the foundations for widespread implementation of renewables in South Africa. In the decade since then, the targets have been successively ramped up and the 2011 Integrated Electricity Resource Plan (IRP) includes an ambitious scheme to kick start renewable projects and develop local skills, capacity and supply chain.
Pretoria is looking to procure 3.2 GW of renewable capacity, largely onshore wind and solar in the next few years, rising to 18GW by 2030. Proposals for renewable energy schemes have been rewarded with government backed power purchase agreements, turning South Africa into a very attractive market for international renewable energy developers.
UNEP's Global Trends in Renewable Energy published June 2013 identified a spectacular jump in of $5.7 billion investment in South African renewables in 2012, giving it the biggest annual clean energy investment growth rate in the world last year.
A quarter of the money went on wind farms, with the $251 million Rainmaker Dorper Wind Farm I, the biggest scheme at 100 MW. Three quarters of the investment went into solar projects, with two 75 MW facilities - the Solar Capital De Aar PV Plant Phase 1and the Scatec Solar Kalkbult PV Plant each receiving around $260 million.
In November 2012, government signed power purchase, implementation and direct agreements approving 28 wind and solar projects under South Africa's Renewable Energy Independent Power Producer Procurement Programme. Investment of R47 billion ($4.6 billion) in the projects will yield a combined installed capacity of 1415 MW.
South Africa ranks 23rd in Ernst and Young's 2013 Renewable Energy Country Attractiveness Indices, 30th for wind and 22nd for solar power, The country is the main player in the Southern African Power Pool, (SAPP) which interconnects the electricity transmission systems of a dozen countries. Total installed generating capacity in the SAPP countries is currently 54.7 GW, of which three quarters comes from South Africa.
Barriers to development
While nature may provide abundant resources, man must resolve vital issues such as the technology, regulation, finance, transmission access and off-take arrangements.
The Baker & McKenzie report The Future for Clean Energy in Africa published June 2013 says that renewable energy has the potential to play a major role in reducing Africa's acute power supply gap and that it can compete with conventional energy sources in SSA particularly away from transmission networks.
Many projects rely on funding from international development finance institutions and export credit agencies. However, in South Africa, local banks have financed most of the country's programme. In Europe, the mechanism used by governments to boost development of renewables has been a regime of feed in tariffs (FiTs), while in the US renewable targets have been used.
Marc Fèvre of Baker & McKenzie told Power Engineering International: "We have seen with successful projects in SSA that you don't necessarily need a FiT regime. What you do need is a power purchase price that makes sense.
The IPP model, which South Africa has chosen has been very successful. Projects are also being developed in Cote d'Ivoire, Mauritiana and Kenya under an incentive regime but on a bilateral basis between developers, governments and development finance institutions. The biggest large scale roll out of renewable energy in SSA has been on that basis rather than FiTs."
The under-developed transmission networks in SSA mean financing and developing infrastructure i s an issue for large scale renewable projects. This is a continent where deployment of small scale renewables makes economic sense.
Fèvre says: "There is not one problem and one solution. It's a question of getting the economics and legal framework right in a particular project and being able to put it in place sensibly."
Scott McGregor, chief executive of Camco Clean Energy, told Power Engineering International: "The key is getting security of off-take arrangements. South Africa is leading the way and other countries are learning from this experience. Ghana is finalising its systems, but it wil take another two years to sort out tariff and off-take arrangements. Donor fund are helping governments to design proper policies."
Africa can be a challenging place to do business and companies accustomed to developing renewable energy in developed markets don't necessarily have the know-how or the contacts to do business there.
South Africa is an easier place to do business than most of SSA and its procurement policy has brought in experienced developers. Fèvre says that "once developers are based in South Africa, they will start looking at other opportunities. Developing a large base of skills in SSA which can then be deployed elsewhere will have a very positive effect on the renewable energy sector in Africa."
Wind power as a catalyst?
Wind Energy Development in Africa, a 2012 report by the African Development Bank, identifies wind power as a potential catalyst for socio-economic development of the continent. It picks out Somalia, Sudan, Mauritania, Madagascar, Kenya and Chad as countries with significant potential wind resources.
However, currently scarce use is being made of the resource and much development and investment is needed to bring this to fruition. Onshore wind projects are in the pipeline in South Africa, Namibia, Kenya and Senegal. For example, the €633 million Lake Turkana Wind Power Project (LTWP) in Kenya's Highlands could provide 300 MW of wind power to the national grid, (augmenting the current electricity generating capacity by one fifth). The plan is for 365 turbines, a high voltage substation and upgrades to the transmission line and road network.
The Cape Verde islands, 570 km off the west coast of Africa, aim to be entirely powered by renewables by 2020. The windswept islands lie in the Trade Winds belt and the government wants to develop wind projects to reduce reliance on imported diesel and fuel oil. Currently 30 new wind turbines on the four islands produce up to 28 MW of electricity.
Cabeolica is the first commercial-scale, privately financed, public private partnership wind farm in SSA. Debt funding for the $85 million project was provided by the European Investment Bank and the African Development Bank. Public private fund manager EleQtra developed the finance model using capital from Infraco, an infrastructure development company funded by European governments and the World Bank. It hopes to deploy the model elsewhere and work is underway in Senegal and Ghana.
In areas of tectonic and volcanic activity high pressure steam can be extracted from deep underground and used to turn turbines and generate electricity. The East African Rift Valley stretching nearly 5000 km through East Africa is one such location. Hot springs, geysers, and earthquakes are surface manifestations of immense subterranean activity.
Geothermal power projects are more capital intensive than many other renewable energy projects and have a longer lead time before costs can be recovered. Developing geothermal energy involves early risk and costs in surface studies, exploration drilling, appraisal drilling and feasibility studies. However if it can be harnessed, geothermal energy has the potential to provide base-load electricity, improving security of supply and increasing access to electricity.
The Rift Valley passes through a number of East African countries which rely on hydro-power for electricity, but a succession of droughts have reduced output. Kenya, one of the world's top ten producers of geothermal energy, has been the most active in harnessing this renewable source. It has an estimated geothermal potential of 10 GW.
The Kenyan government wants to see 5000 MW of geothermal energy developed by 2030. Currently 250 MW of capacity has been installed, with another 280 MW due to come on-stream within a year.
Kenya has a liberalised and unbundled electricity supply structure. It has established a legal and regulatory system covering geothermal exploration and development, ownership of steam resources and licenses and set up the Geothermal Development Company, a state-owned Special Purpose Vehicle to fast track the development of geothermal resources in the country.
Ethiopia has 7 MW of installed geothermal power generation at Aluto Gangana with another 70 MW in the pipeline. Rwanda and Tanzania each have estimated geothermal potential of around 600 MW to 700 MW. Some exploration and identification of sites has taken place, but the absence of national structures (notably regulatory regime and renewable incentives) has discouraged development.
Developing geothermal energy will take external input: agencies including The World Bank, African Development Bank, USAID, and the Icelandic International Development Agency now have schemes offering finance to Rift Valley governments to enable exploratory phase geothermal investigation and to encourage development of capacity and skills in geothermal energy.
While East Africa's geothermal potential has been neglected until fairly recently, developments in Indonesia could spur Asian interest and investment in the Rift Valley geothermal, but governments will need to put secure off-take arrangements in place.
Solar and off-grid renewables
The cost of solar power technology has fallen, making it an attractive proposition throughout the region. Solar PV is suitable for projects of different scales - on and off-grid - and the technology is seeing uptake in projects of varying scale. The first concentrated solar power plant in SSA is being planned in South Africa.
McGregor told Power Engineering International: "I see great opportunities for communities using solar power to take a quantum leap from no generation into renewable energy."
Vast swathes of the region have no access to transmission networks. Power comes primarily from solid biomass and isolated diesel generators. In Malawi and Uganda less than 10 per cent of residents have access to electricity.
The International Energy Agency estimates that investment of more than $300 billion is needed to achieve universal electricity access by 2030, but there is no prospect of this happening in the short term.
For off-grid, rural communities, solar-powered microgrids are a realistic source of electricity. Across the continent, various organisations are funding initiatives to introduce small-scale off-grid solar, hydro an d geothermal power to rural areas.
Case Study: Tanzania off-grid solar
The Tanzanian government encourages private sector, renewable energy approaches to rural electrification which is leading to the development of a thriving market for solar photovoltaic technology.
Tanzania's largest off-grid solar project was rolled out at Kigoma in 2012. It targeted public sector, business, and households in a rural area, and solar modules have been installed in 45 secondary schools, 130 health facilities, 25 village markets, and 90 fishing boats. The $5 million project was funded by Millenium Development Corporation and managed by Camco Clean Energy which worked with a Tanzanian solar contractor, Rex Investment.
Another Tanzanain project managed by Camco Clean Energy is a Clusters Solar PV Project financed by the European Union. The objective is to install 1000 solar systems in rural Tanzanian homes, and at the same time train local people to run their own solar businesses.
McGregor explains: "We have been working in Tanzania for seven years. A lot of the work we've been doing is setting up distribution channels, training importers, distributors and installers. We have set up a supply chain across Tanzania. It is very smart use of public money - some of the best use of non-profit funding I've seen."
Tanzania's Rural Energy Agency provides a small subsidy for each solar system installed under the Cluster project and the farmer pays for the rest of the system over three years via a commercial loan acquired by his farmers' association. Standardising equipment, bulk purchase, credit-financing and subsidies make the scheme work.
The clusters are groups of a minimum of 1000 members who tender for the equipment, to ensure value for money and quality. Both local and international solar PV equipment suppliers bid to become providers and suppliers for the Clusters Solar PV Project. McGregor is proud of the way that these funded projects have established a solar PV industry in Tanzania. Dozens of solar Cluster Groups around Tanzania could benefit tens-of-thousands of rural households.
McGregor says: "There is a lot of work being done in Kenya and Tanzania into local, independent grids rather than extending existing grids. The supply networks can be quite entrepreneurial - energy demand is coming from new technology uses such as the need to charge mobile phones.So, a village might have a telecoms tower with fuel support [diesel or solar] where people can plug in and charge mobiles. This can then be a micro-power source allowing the village to charge up devices and provide lighting."
The big question is whether South Africa's $8.8 billion programme will open the door for development of renewable energy throughout the SSA region.
McGregor adds:"We are seeing a lot of new approaches bringing power to SSA."Fèvre says: "What I think is really exciting is that the resources are there in a lot of countries and developers are starting to turn their attention to the opportunities.
"Once you have a few projects with a track record and a bit of experience, that will create confidence and more investors will come in. I think we are seeing acceleration at the moment. Over the next couple of years we will see a number of successful projects across the continent which will lead others into the market."
Penny Hitchin is a UK-based freelance writer, specialising in energy matters.