By James Mwangi, Executive director of Dalberg Group and founder of the Climate Action Platform-Africa.
For a majority of African governments, embracing fossil fuels as the basis for development essentially locks them into dependence on globally traded commodities.
Africa’s rich endowments of solar, wind, hydropower and geothermal among other green energy resources gives the continent a head-start. Increased investments and development would take it to the finish line.
The continent’s potential wind resource, for instance, exceeds 59,000GW, according to a study by International Finance Corporation (IFC), which is enough to power the continent’s energy demand 250 times over. Yet, more than half the population lack access to electricity and clean cooking solutions.
Natural gas is being pushed as the solution for Africa’s energy needs as world leaders meet in Cairo for the COP27 climate summit. It’s important that each country runs a cost-benefit analysis in deciding whether to adopt gas or not.
For most countries, gas wouldn’t make economic sense.
Nigeria, for instance, knows that it would take decentralised solutions such as solar-powered mini-grids if it’s to achieve universal power access especially in the northern parts of the country largely cut off from the national grid.
Lighting up these rural states using gas-fired electricity would require large investments in grid expansion, an exercise that can take decades. Nigeria should instead make better use of the gas that has historically been flared from its oilfields.
With development highly concentrated in major towns and cities, much of sub-Saharan Africa would find extending national grids to all remote villages too expensive, a process that could take another century if not longer. This means that without the off-grid power interventions, most communities would still remain in the dark even with gas-fired power additions to the central grid.
The good news is that decentralised solar solutions continue to record cost decreases and can be deployed and installed quickly to ensure energy access for all.
Average global costs of solar PV and onshore wind have more than halved in the past decade. Over the same period, fossil fuel prices including gas have fluctuated wildly, most recently roughly doubling due to the war in Ukraine.
Because gas is a globally traded commodity, its price everywhere is driven at least partly by global supply and demand regardless of whether a particular country has domestic gas resources or not. Moreover, unlike renewable power, whose cost can be largely fixed at the point of deployment, gas power costs often fluctuate to reflect movements in fuel prices.
For majority of African governments, embracing fossil fuels as the basis for development essentially locks them into dependence on globally traded commodities.
Africa produces only about 8.1 percent of global oil today, and Nigeria which has the largest proven reserves in Africa, only accounts for 2.2 percent of global total reserves and ranks 14th in production.
Most African countries (almost 40) have no proven oil and gas reserves, and could therefore lead the continent in the renewable energy drive.
Energy supply is not the only challenge in most parts of Africa. High tariffs, due to global price volatility of fuels, poses an equally big challenge. Underdeveloped networks also means large parts are cut off from the national grid.
Volatility of fossil fuel costs also directly impacts energy security and economic stability since fossil fuel imports are for most African countries the single largest import item, meaning that shifts in fuel price immediately show up in all prices as inflation.
Conversely, once installed, renewables are a localised asset whose energy production costs only vary modestly with costs of maintenance.
With abundant renewable energy sources, Africa can lead the sustainable energy transition curve to become energy secure. To achieve this, African leaders need to negotiate more with developed countries and investors to unlock investment flows to Africa. There’s actually enough money for renewables only that it’s not flowing to Africa. Out of the $2.8 trillion that went into renewable energy between 2010 and 2020, only two percent came to Africa, according to the International Renewable Energy Agency (IRENA)
It is worth noting that renewable energy investments in Africa actually have a stronger business case than almost anywhere else in the world. According to World Bank’s Global Solar Atlas, a commercial solar installation in Kenya or Nigeria, generates 60 percent more energy than a similar-sized plant in central Europe. This means that investing in African solar can hand investors more returns.
The 310MW Lake Turkana Wind Power in northern Kenya boasts an average capacity factor of 58 percent and 50 percent for the 100MW Kipeto wind farm – much higher compared to between 35 and 41 percent for wind farms in America and Europe.
The benefits that come with renewable energy are many, from higher power access levels to socio-economic rewards such as sustainable jobs, improved agricultural practices and learning conditions to health benefits.
The World Health Organisation (WHO) estimates that about 4.2 million people die annually from outdoor air pollution.
Renewable energy is the answer to Africa’s energy challenges, not gas.
The author is the executive director of Dalberg Group and founder of the Climate Action Platform-Africa.
