Renewable energy trends in Africa
The latest data available from the World Bank Group for 2016 shows that nearly half of the world’s population who do not have access to electricity live on the African continent. Despite several initiatives – national, regional and international – the electrification rate in Africa for 2016 stood at 43% overall and less than 30% for Sub-Saharan Africa. The continent is home to some of the world’s best solar and wind resources, for instance the Great Rift Valley jet stream and direct solar irradiance in the Namibian desert; solar PV and onshore wind energy costs have also decreased significantly in the recent past. it seems only natural that many African countries have turned to renewable energy to address their electricity deficit and high electricity prices, and to bring power to the African people.
The trend towards renewables is witnessed from Morocco to South Africa and from Kenya to Senegal. However, these sources of energy are also intermittent – their deployment requires a grid infrastructure strong enough to alleviate variability and lack of dispatchability (the off-taker is usually obliged to accept as much or as little power as the plant is able to produce at any time). Intermittency represents one of the challenges grid operators and planners across the African continent are trying to resolve.
According to established international practice, large-scale renewable energy development goes hand in hand with a proportionate level of spinning reserve (or other mechanisms, such as interconnection with neighbouring national grids) to secure the entire grid. Electricity generation being the most pressing need in many nations, reserving capacity for emergency situations is an expensive measure and one that not many grid operators are currently willing or able to support. Because of this dilemma, initiatives are implemented across the continent to interconnect countries, allowing the sharing of spinning reserves, so that national grids are not operating in an isolated manner. Interconnectedness is one of the key strengths of the continental European power grid when accepting increasing renewable generating capacity. It is thus likely to represent a massive infrastructure development in African countries over the medium term, backed by capacity building at the grid operation level to enhance renewable energy dispatching.
Beyond grid capacity constraints, the development of renewable energy projects in Africa has historically been hampered by several technical, regulatory and financial challenges; for instance, high transaction costs, perceived risk of off-taker payment default, political instability, physical grid connection challenges, accessibility, social and environmental impacts and/or grid code compliance. It is therefore common to take more than a decade for a renewable energy project to progress to the construction stage. To make such projects viable, investors have tended to develop larger scale schemes, over 150MW for onshore wind. This creates a second challenge for the renewable energy market in Africa as it makes it even more difficult to integrate or to finance such projects, considering the relative scale of national grids and indeed gross domestic product (GDP). Nonetheless, flagship projects that Mott MacDonald has been involved in, such as Taïba N’Diaye wind farm in Senegal, Lake Turkana wind project in Kenya and various 100MW CSP projects in South Africa, have paved the way to demonstrate this is feasible. Such projects help create momentum for bespoke projects to be more successful in the near future.
Another solution to implement renewable energy projects in Africa has been explored and implemented for a few years now – using various forms of public tender to award generating capacity to independent renewable power producers. To get lower electricity prices, several African countries have launched renewable energy auctions, joining a worldwide trend. South Africa has been the leading example for years with its renewable energy independent power producer procurement (REIPPP) programme and the scaling solar initiative spearheaded by the International Finance Corporation (IFC). Mott MacDonald supported both schemes in a technical advisory capacity.
It is essential in such auctions in Africa to avoid what is called “the winner’s curse”, whereby a winning bidder is inadvertently bidding below its costs, thereby making the project unlikely ever to reach financial close and construction. This represents the third challenge for the African renewable energy sector. Because of the stiff competition under auctions, it is common for bidders to bank on a future further decrease in costs (on solar panels for instance) to support aggressive bids. The risk of project non-completion increases if such assumptions are unrealistic. This is the opposite outcome of what an auction is trying to achieve, which is to secure investors, and hence projects.
In the African continent, where the electricity generation capacity is often aging and expensive, the race to the bottom appears unnecessary because renewable energy should easily meet grid parity, even in countries with mature baseload power generating capacity. Some renowned international players have turned down the opportunity to bid in such auctions resulting in less competition and a loss of proven actors to take forward the African renewable energy market. Floor prices or other alternatives to secure project completion could be explored in these national auctions to reduce the risk of projects not reaching completion. This would support the ultimate objective of bringing power to the 70% of Sub-Saharan Africans without access to electricity.
Matthias Vinard is the Renewables Programme Director at Mott MacDonald
G7 Summit guide: What it is and what leaders hope to achieve
Unless you’ve had your head buried in the sand, you’ll have seen the term ‘G7’ plastered all over the Internet this week. We’re going to give you the skinny on exactly what the G7 is and what its purpose on this planet is ─ and whether it’s a good or a bad collaboration.
Who are the G7?
The Group of Seven, or ‘G7’, may sound like a collective of pirate lords from a certain Disney smash-hit, but in reality, it’s a group of the world’s seven largest “advanced” economies ─ the powerhouses of the world, if you like.
The merry band comprises:
- The United Kingdom
- The United States
Historically, Russia was a member of the then-called ‘G8’ but found itself excluded after their ever-so-slightly illegal takeover of Crimea back in 2014.
Since 1977, the European Union has also been involved in some capacity with the G7 Summit. The Union is not recognised as an official member, but gradually, as with all Europe-linked affairs, the Union has integrated itself into the conversation and is now included in all political discussions on the annual summit agenda.
When was the ‘G’ formed?
Back in 1975, when the world was reeling from its very first oil shock and the subsequent financial fallout that came with it, the heads of state and government from six of the leading industrial countries had a face-to-face meeting at the Chateau de Rambouillet to discuss the global economy, its trajectory, and what they could do to address the economic turmoil that reared its ugly head throughout the 70s.
Why does the G7 exist?
At this very first summit ─ the ‘G6’ summit ─, the leaders adopted a 15-point communiqué, the Declaration of Rambouillet, and agreed to continuously meet once a year moving forward to address the problems of the day, with a rotating Presidency. One year later, Canada was welcomed into the fold, and the ‘G6’ became seven and has remained so ever since ─ Russia’s inclusion and exclusion not counted.
The group, as previously mentioned, was born in the looming shadow of a financial crisis, but its purpose is more significant than just economics. When leaders from the group meet, they discuss and exchange ideas on a broad range of issues, including injustice around the world, geopolitical matters, security, and sustainability.
It’s worth noting that, while the G7 may be made up of mighty nations, the bloc is an informal one. So, although it is considered an important annual event, declarations made during the summit are not legally binding. That said, they are still very influential and worth taking note of because it indicates the ambitions and outlines the initiatives of these particularly prominent leading nations.
Where is the 2021 G7 summit?
This year, the summit will be held in the United Kingdom deep in the southwest of England, with Prime Minister Boris Johnson hosting his contemporaries in the quaint Cornish resort of Carbis Bay near St Ives in Cornwall.
What will be discussed this year?
After almost two years of remote communication, this will be the first in-person G7 summit since the novel Coronavirus first took hold of the globe, and Britain wants “leaders to seize the opportunity to build back better from coronavirus, uniting to make the future fairer, greener, and more prosperous.”
The three-day summit, running from Friday to Sunday, will see the seven leaders discussing a whole host of shared challenges, ranging from the pandemic and vaccine development and distribution to the ongoing global fight against climate change through the implementation of sustainable norms and values.
According to the UK government, the attendees will also be taking a look at “ensuring that people everywhere can benefit from open trade, technological change, and scientific discovery.”