Why Are African Countries Affected by Electric Power Shortages and Frequent Interruptions, While Having Huge Renewable Energy Potential?

November 23, 2022

BY WONDIMU TEKLE SIGO (PhD, Eng.)

PART II

Therefore, to develop the continent huge renewable energy potential the outstanding challenges in the electric sectors should need urgent action to achieve and realize the African vision for sustainable economic growth and development. Hence, the ineffective and inefficient electric institution setup is an important reason for the need to implementation of the sector reform as follows:

A) Unbundling of the vertically integrated electric power utilities

The African countries should have to focus on further unbundling the vertically integrated power generation, transmission, and distribution sectors. In addition to that policy and regulatory reforms that enable better demand and efficiency management, smart grids, on-grid, and off-grid distributed generation investment, and transport electrification may be considered. Other actions such as human capital have to be thoroughly developed through gaining in-depth knowledge; it has to be helped with modern technology thereby substituting old infrastructure and must emphasize upgrading the distribution network to reduce huge power transmission loss due to distance factors. Therefore, to develop the continent’s huge renewable potential the improvement of the unbundling of the vertically integrated electric power utility becomes a critical path.

B) Make the price of electricity the right

Because of the future effects of the electric power supply on economic growth and to realize Africa’s Agenda 2063, significant investment has necessary but the low price level has declined the utilities’ ability to finance the electric infrastructures to come across the growing demands of electricity. Hence, the fundamental measure is to make the price of electricity right. The right price can motivate the market to invest in the electricity supply. If the electricity price is regulated to a very low level, no private investors would invest in the industry and the utilities also have limited incentives to improve the service. Many governments explain the most important objective of this protection of tariff adjustment is to guarantee a dependable supply of electric power at reasonable prices, mainly to help the nation’s industrial development as well as the low-income people; but in a real sense it won’t help.

Hence, the government’s concern is not convincing because with the low electric tariff they are the rich people that are consuming more electricity than the low-income people and it is the industries that are affected due to shortage and interruption of electric power. In other words, in Africa, it is the utilities that are subsidizing the rich people for their electric consumption. Therefore, each government should give full sovereignty to the utilities and distinguish social or political issues with the utility service. That means the utilities should have the autonomy to set the right price or tariffs as per their delivery; otherwise, they couldn’t discharge their duty and be accountable for their weak performance. In addition to growing revenue of the utilities at reasonable prices, the mobilization of large sums of finance from both public and private sources should be well-thought-out to harness the continent’s huge renewable potential.

C) Increase the renewable energy mix

The entire installed renewables and fossil fuels generation capacity in Africa as of 2021 was 232 GW. Since the current installed generation capacity mostly depends on fossil fuels it should need to increase renewable energies. Because Africa’s renewable energy resources are diverse and enormous in quantity, which indicates almost unlimited solar potential (10 TW), abundant hydro (350 GW), wind (110 GW), and geothermal energy sources (15 GW). Of course, there is a growth in renewable power capacity. For example, Africa’s total renewable generation capacity increased from 28.45 GW in 2012 to 55.71 GW in 2021, which means the total renewable energy capacity increased by 27.26 GW (+49%). In 2021 the total renewable generation capacity increased by 2.1 GW (+4%) from 2020. Wind energy led to capacity expansion, with an increase of 0.85 GW (+13%), followed by solar with 0.6 GW (+6%), hydropower capacity increased by 0.61 GW (+2%), other renewables energy increased by 0.05 GW (+3%). Moreover, the renewable energy mix with different sources should be governed to tackle unforeseen problems such as climate change.

D) Open for private sector participation

In general, most African governments have supported much of the finance for large-scale energy projects, raising resources from taxes and other public sources. The trend of state-led helping electric infrastructure development is expected to continue. As previously stated in most African countries the electric utility systems are vertically integrated, i.e. state-owned utilities provide electricity distribution, transmission, and generation.

To unlock various problems private sector participation is become a serious path for energy development and utilization. Especially, participation in the private sector could bring finance and utilize the expertise of international energy developers and investors. Therefore, it is very necessary to transform the public or state-owned monopoly utilities to a vertical and horizontal unbundling of generation, transmission, and distribution, which is dominated by private sector participation. This will help to organize the competition in an independently regulated environment.

Policy recommendation

Therefore, to achieve Africa’s Agenda 2063 goal in the electric power sector, there should be strategic management, finance, and investment as well as smart energy, transmission, and distribution to improve the outstanding issues including:

First, African countries should have to emphasize unbundling of the vertically integrated power generation, transmission, and distribution sectors. Second, the price of electricity should be determined as per the market value, which means the utilities should have the autonomy to set up the electricity tariffs as per the market and their delivery. Third, make sure the power supply is a precondition for any country’s industrial development through clean energy, and each country must increase the power supply facilities with different renewable energy mixes such as solar, hydropower, wind, and geothermal energy. Finally, to unlock various problems private sector participation is a critical path in energy development and utilization, because the participation of the private sector can bring finance and utilize the expertise of international energy developers and investors.

The author of this article is Dr. Eng. Wondimu Tekle Sigo.

Due to his contribution to the Power, Energy, and Water sectors recognition received the 2019 African Power, Energy, & Water Industry Lifetime Achievement Award in Cape Town, South Africa. He also serves two times on the advisory board of Enlit Africa.

Wondimu Tekle Sigo is a dedicated civil servant with strong engineering, economics, projects, and programs management background. He has many years of extensive direct hands-on experience in development projects/program management. These include, but are not limited to planning, implementation, supervision, and monitoring/evaluation of infrastructures in the area of renewable energy, water supply, sanitation, irrigation, and drainage as well as airport facilities.

THE ETHIOPIAN HERALD WEDNESDAY 23 NOVEMBER 2022