Page 4 - AfrElec Week 07 2023

AfrElec COMMENTARY AfrElec

Africa promises long-term

dividends to early solar investors

There is a growing appetite to invest in renewables in Africa amid the energy crunch,

with multi-year investment opportunities arising

SOUTH AFRICA ACROSS the African continent, electricity players that recognise Africa’s untapped
generation from renewables has more than potential.
doubled in the last 20 years, with Egypt and
South Africa leading the way. According to the Constraints and challenges
WHAT: Western Cape Tourism, Trade and Investment Many African countries have inadequate grid
Early investment in solar Promotion Agency (Wesgro), there is a growing infrastructures designed only to accommodate
power in Africa will bring appetite to invest in renewables amid the energy conventional energy sources, resulting in high
long-term dividends, crunch, with multi-year investment opportuni- electricity losses and low supply quality, among
energy analysts have ties arising. other issues. This is also a barrier to the clean
saidt These opportunities stem from the conver- energy transition. In South Africa, the conti-
gence of several factors, said Wesgro’s CEO, nent’s most advanced economy, coal accounts for
WHY: Wrenelle Stander. International shifts to clean 84.4% of electricity production, according to the
Africa has untapped solar energy, the focus on energy security globally Global Electricity Review 2022 by independent
generation potential and as a result of the Russia-Ukraine conflict, the think-tank Ember.
growing energy demand energy crisis in South Africa and the conse- South Africa’s reliance on its ailing power net-
quent policy shifts at a national government work of poorly maintained, ageing coal power
WHAT NEXT: level to deregulate the energy sector – have all stations has resulted in the worst energy crisis in
Investors will focus on contributed to the rise of solar power, albeit out the last 20 years. The country is struggling with
affordable electricity of necessity. rolling power outages, or load-shedding, cur-
services through mini- “The time is now for renewable manufactur- rently applied for between six and eight hours
and micro-grids and off- ing,” said Stander. daily. The measure, imposed by the state-owned
grid renewable systems power utility Eskom to save the grid from col-
Untapped potential. lapsing, is costing the economy ZAR899mn
Africa typically has many more hours of sun- ($51mn) per day, according to South African
shine during the year than any other continent. Reserve Bank (SARB).
However, despite this significant solar potential, The energy crisis dominated President
penetration of solar power in Africa’s energy Cyril Ramaphosa’s seventh State of the Nation
sector remains quite low. Address (SONA) on February 9, during which
According to the International Energy he declared a national state of disaster with
Agency (IEA), Africa has 60% of the world’s best immediate effect. According to Ramaphosa,
solar resources, but only 1% of solar generation the state of disaster will enable the government
capacity. To achieve its energy and climate goals, to provide concrete support to ailing businesses
Africa needs $190bn per year of investment in the food production, storage and retail supply
between 2026 and 2030, with two-thirds of this chains. These actions, he said, will include the
going to clean energy, the IEA has said. rollout of generators, solar panels and uninter-
Historically, however, many rural and dispa- rupted power supply technology.
rate communities throughout Africa have been However, many energy experts believe that
excluded from grid-based electricity sources, the national distribution system is ill-equipped
creating setbacks in development and pre- to handle new generating technology, such
venting access to basic amenities. With many as solar and wind. Their view is supported by
African governments recognising the need to Andrey Melnichenko, a sanctioned Russian bil-
service the high levels of demand for electricity, lionaire who made his fortune from generating
investors could discover new opportunities in electricity by burning coal. In his opinion, South
helping these countries not only to access and Africa needs to upgrade its coal-fired power
distribute electricity more equitably but also to plants rather than focus on renewable energy
meet net zero emissions targets. as the country’s national grid is unsuitable for
Leveraging these opportunities early is green energy.
expected to pay long-term dividends to key “The priority for the country should be first

P4 www. NEWSBASE .com Week 07 15•February•2023