Will 2015 be the year of solar power across Africa?

Energy Klima

A few weeks ago, I was asked by the organizers of Africa Energy Investment Exchange to share my views after five years of developing solar power in Africa. Here is the conclusion I communicated at this London event: With the notable exception of South Africa that stands out as a shining example and a few others, progress has so far been disappointingly slow. However, the good news is that a number of African governments and utilities now seem to have done their homework, and are therefore set to make 2015 the year of solar power across Africa.

 

In January 2015, South Africa’s Minister of Energy will announce another doubling of the renewable energy capacity in the country. The Republic is struggling with regular blackouts due to breakdowns in its aging fleet of mainly coal power plants. The Government has decided to accelerate and expand the solar and wind programs for two reasons: Wind and solar photovoltaics (PV) are not only competitive with coal and gas in terms of price, but they can also, and particularly PV, be built and scaled up rapidly to meet electricity sector needs. No other power generation technology shares this flexibility.

The Pretoria government’s original plan was to procure 3,725 megawatts through the five bid Windows in the country’s Renewable Energy Procurement Program, and has now reportedly decided it will accept offers representing an additional 3800 MW . Of the ca 4000 MW allocated in the three first rounds of renewable energy in South Africa, solar PV got 1500 MW and CSP (Concentrated Solar thermal power) 400 MW. The average tariff offered by the private solar PV power companies dropped by approximately 60 percent between round 1 and round 3 three years later. As another sign of success, the average share of equipment and services supplied by domestic South African companies rose from rose from 20 percent in round 1 to more than 50 percent in round 3, creating thousands of new high-quality jobs all over the country.

 

However, the Rainbow Nation’s success story have not yet led sister nations across the continent to follow suit, with the exception of Rwanda, Mauritania and Morocco that completed or started the construction of utility-scale solar plants this year. Nevertheless, I believe this is set to change in 2015. A large number of countries across Africa have announced targets for renewable energy, and prepared regulatory changes to accommodate private Independent Power Producers (IPPs) in the renewable energy sector. It is furthermore an unhappy fact that several regions in Africa suffer from more severe droughts and more unpredictable rainfall than they are used to, significantly reducing the number of kilowatt-hours supplied by all the hydroelectric power plants across Africa.

Mali is a country that is suffering from erratic rainfall and hence increasingly variable hydropower production. Heavy fuel oil and diesel count for more than 50 % of the country’s power production. Mali was one of the first countries in Africa to lay out a solar plan and to invite private developers to develop and propose IPPs. Unfortunately, the process suffered a setback because of the 2012 coup d’état following the Islamist and Tuareg revolts in the North. However, this year Mali authorities seem determined to implement decisions that will lead to the construction of West Africa’s first large-scale solar power starting in 2015.

Neighbouring countries in West Africa are working to make progress in 2015 as well. As shown in this article from a Dakar event earlier this year, solar PV appears particularly attractive in this region due to its high reliance on diesel and heavy oil for power generation.

• Burkina Faso announced the results of a 50 MW international solar IPP tender in October this year. Unfortunately, the execution was put on hold because of the popular protests and the sudden resignation of President Blaise Compaoré. Now that a transitory government is installed and Presidential election set to take place in 2015, it is expected the awarded solar projects will be executed in 2015.
• In Ghana, a large number of developers have been active developing solar projects for the last few years. But with the recent government announcements of a new set of guidelines, including a Feed-in-Tariff as well as a cap on individual project size and total installations, the ground is hopefully ready for Ghana to sign the first solar power investment contracts in 2015.
• In Ivory Coast, the authorities this last fall invited foreign investors to participate in a first IPP tender for 20 MW of solar PV, with construction set to start in 2015. Further south, the stakeholders in the sunny country of Namibia have been hesitating for long, but now the country’s utility Nampower has decided to carry out the 3 x 10 MW solar PV tender early next year.

Utility-scale solar power is coming to Eastern Africa as well, although with less urgency than in rest of Africa due to the perceived availability of alternative generation options. Uganda recently announced the results of its first solar IPP tender, the so-called GetFit program limited to projects up to 5 MW supported by European donors Germany, Norway and others. New tenders will follow the construction in 2015 of the first 20 MW, according to the Ministry of Energy. In neighbouring Kenya, already a first mover in implementing IPP in the geothermal and wind energy, it is expected that the first large scale solar PV projects will approved in 2015.

Finally, to obtain a real appreciation of the solar growth potential in Africa, we should look to North Africa notably Morocco and Egypt. Morocco, determined to move forward with its ambitious plan to install 2000 MW of solar power by 2020, is currently building its first 160 MW solar thermal power plant as part of the 500 MW NOOR Ouarzazate complex. Construction of the remaining 350 MW is set to start in 2015, following the successful fund-raising with international development banks concluded recently.

Asyv solar power plant under construction in Rwanda. The plant started production in 2014 (photo: Scatec Solar)

However, the biggest surprise in 2015 may come from Cairo, where the government led by General Sissi is attacking the country’s power crisis. In the summer 2014, large parts of the country were suffering from blackouts lasting hours at a time, creating enormous frustration and losses in the business sector. The peak demand hit levels 20% higher than the mainly gas-fuelled power stations could provide. Furthermore, Egypt’s domestic gas resources are on the decline, forcing the country to look for increased imports of gas and fuel to meet the growing power demand. Against this background, the Government of Egypt has invited proposals from foreign wind and solar producers for the construction of 2 x 2000 MW utility-scale PV and wind power respectively, as well as 300 MW of decentralized solar PV. Cairo aims for a rapid deployment, with the first contracts signed and construction started already in 2015. Looking to 2020, the Government has set the very ambitious target of 20 percent of electricity demand from renewables, which could lead to more than 5 GW of solar PV in Egypt the next 5-6 years. To increase the generation capacity with 5 GW of solar PV would necessitate Egypt attracting foreign investments in the range of 8-9 Billion USD.

This high-level review of Africa solar developments shows the sector is set to grow faster than anticipated in IEA’s recent publication «Africa Energy Outlook». As I recently commented in an article you can read here  IEA not only overstates the cost of harnessing Africa’s vast solar resources, it also underestimates the costs and hurdles related to conventional energy sources.

What can governments and multilateral organizations do to support the rapid deployment of large-scale solar power in Africa? The main challenge facing developing nations is the competition for scarce funds and government guarantees. Therefore, capital-intensive investments in low-carbon energy tend not to be prioritized when competing with needs that are more urgent. On the other hand, governments in rich surplus countries, pension funds and sovereign funds should look at investments in and guarantees to renewable infrastructure assets in emerging markets as an oppurtunity to attract higher return than they get in mature markets while at the same time enabling the required low-carbon transformation. According to IEA the average cost of solar power in Africa would be cut in half, if the continent could obtain the same cost of capital as in Germany. In other words, the New Year message to governments and financiers should be simple and straightforward: Give Africa access to green financing, and Africa will help green the world.

 

 

 

Source: Energi Klima. Reproduced with permission.