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Bright Outlook of Renewable Energy in The Sub-Saharan Africa

Renewable energy will make up almost half of sub-Saharan Africa’s power generation growth by 2040, according to a report by the International Energy Agency. As per the recent reports, Geothermal will become the second-largest source of power supply in East Africa, mainly in Kenya and Ethiopia. Two-thirds of the mini-grid systems in remote regions in 2040 are power-driven by solar photovoltaics, small hydropower, or wind. As technology costs come down, the attraction of renewable systems versus diesel generators grows, especially where financing is available to cover the higher upfront expense. Additionally, over the next two years, South Africa is expected to install 3.9 gig watts of renewable energy, mostly in the form of wind and solar, and Ethiopia will establish almost 570 megawatts, while Kenya is set to install 1.4 gig watts.

Glimpse into the Accessibility of Resources

As per recent reports, approximately 620 million people in the region still have no access to energy sources such as electricity. However, Sub-Saharan Africa’s economy has been growing rapidly since 2000, but the fact that two-thirds of the region’s population lacks access to electricity is hindering the growth. The table below shows region wise analysis of the percentage of population which still lacks access to the energy resources.

RegionMore than 75%50%-70%25%-49%
South Sudan80%
Democratic Republic of Congo80%

Composition of Energy in The Region

Africa is predicted to add about 1.8 gig watts of renewable energy capacity which is more renewable energy than the continent added in the last 14 years combined. The region however is heavily dependent on solid biomass as a major source of energy. The entire renewable sector has huge potential for capturing the market and helps enhance sustainability in the region. The figure below shows the composition of the energy sources and their shares in the Sub African region.

Current Energy Investment

The African Development Bank predicts that there is a financial space of US$ 42-67 billion per year that must be overcome to attain widespread access to electricity in Africa by 2025. This target will not be reached unless private sector capital is mobilized. The African and international development community and others seeking to support the deployment of grid-connected renewable energy in SSA are addressing how to best convert this staggering potential into operational projects. This conversion can, in turn, provide dependable and affordable electricity sources at the scale required for economic and social development in the region. The figure below shows the percentage of investment by different sectors.

Investment in Energy Vs. Requirement

There is a huge supply and requirement difference between the investment outlays in the Sub Sahara African region. This gap has been widening and there must be a proper coordination in the sources for the growth of the renewable energy sector. The table below shows the same.

CategoriesGAP (in US$ Bn)
Current Investment23.0
Required Investment65.0
Investment Difference42.0

Outlook for The Upcoming Years

Currently, the lack of creditworthy off takers in the SSA is one of the key factors deterring investment in the African renewable energy sector. Weak balance sheets and poor payment track records of many national utilities is one of the reasons why commercial banks have been unwilling to fund Independent Power Projects which has resulted in limited competition, and consequently, a higher cost of capital. New business models are required through which the lack of creditworthiness in the power sector in SSA can be overcome. One such model is the Africa GreenCo which is designed to tackle this creditworthiness constraint by establishing an independently managed, creditworthy intermediary off taker, and a power services provider to mediate between renewable electricity generation companies on the one hand, and both state owned and private sector off-takers on the other. GreenCo will operate as a member of the African regional power pools, aggregate off taker credit risk, and diversify both supply and demand side risks on a regional basis. More such models will ensure not only proper investments but also economic development and ecological growth by reducing dependence on energy sources which pollute the environment.

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