05.Nov.2018

Challenges and Opportunities in Africa’s Renewable Energy Sector

By Federico Persi
  • Current Issue

    Promotion of Renewable Technology in the African Energy Sector

  • Area of Impact

    Oil & Gas; Renewable Energy & Fuels

  • Target Purpose

    Competitive Market Analysis; Geopolitical, Investment Decision

  • Target Audience

    Energy Investors; Energy Suppliers; Renewable Energy Companies

  • App Functions Used

    Momentum Circumplex; Forensic Environment; Geo/Event Analysis

Context

Energy is at the center of two important issues in Africa: ensuring a steady, reliable and sustainable supply for all people in all settings and facilitating and extending the economic growth that has created opportunities and raised hopes across the continent in the past decade. The African Development Bank (AfDB) has set universal energy supply across Africa as a primary target to be accomplished by 2030. This indicates immense opportunity for the continent’s energy sector.

 

While the continent is resource rich (with over 11TW of untapped Solar Energy), more than sufficient to meet domestic needs, energy systems and services still remain vastly underdeveloped, with a current over reliance on oil and gas.

 

Renewable technologies promote more inclusive economic and social development than fossil fuel-based options because they are suitable small-scale solutions that can run independently from central control. Implementation of renewable alternatives has already started in several countries, with Egypt, Ethiopia, Kenya, Morocco and South Africa pathing the way. Smaller countries have also set future renewable energy targets, such as Cabo Verde, Djibouti, Rwanda and Swaziland. Undoubtedly, renewable energy is on the rise across the continent.

Insight gained from Decision Point

  • While the transition from fossil fuels to clean renewable energy is underway, Africa is still heavily dependent on the former.
  • Strategic push for Renewable Energy in Africa suggest concentrated efforts to make the power source commercially viable.
  • Substantial activity present toward the implementation of renewable energy sources.
  • Numerous companies have undertaken projects pushing for the development of clean alternatives, investing in the power industry in Africa.
  • Global awareness for the need to research and invest in the market.

Where are the commercial opportunities in the African renewable energy sector? What is the current state of the market, and what endeavors have been to promote renewable energy as a viable alternative on the continent?

 

To assess the current state of Renewable Energy and Fossil-Fuel based options within the African continent a Forensic Environment search can be conducted. Below are the linguistic elements used to fulfil our query.

 

ENVIRONMENTBEHAVIOR
AGeography: AfricaAConcept: Oil, Gas, Coal
 BConcept: Renewable Energy, Solar, Wind Power

Figure 1: Weekly Resolution: Timespan 12/25/2017-11/05/2018

Figure 2:  Daily Resolution: Timespan 09/15/2018-10/30/2018

 

For the ‘Weekly’ resolution, we notice an abundance of data available for both energy sources, suggesting that they are equally as discussed in media. Changing the time resolution to ‘Daily’ however, fossil fuels feature much more prominently, with double the amount of data points present compared to renewable energy sources. While the transition from fossil fuels to cleaner forms of energy is an environmental necessity, and is slowly being rebalanced, the continent is still heavily dependent on the prior.

 

To gain further insight into the energy sector on the continent, a Geo/Event Analysis can illuminate the  global awareness and investment patterns of the renewable energy sector.

Figure 3: Timespan 9/30/2017-9/30/2018; Concept: Renewable Energy, Geographical: Africa

 

The supporting data, does suggest global awareness of adopting, discussing and advancing clean technologies. Articles included describe joint meetings between African countries and conferences aimed to propagate research on sustainable energy and the sharing of knowledge in the field. Additionally, it calls for the inclusion of off-grid systems, most suitable for rural Africa. With the number of rural homes still reliant on kerosene to generate electric, off-grid renewable energy, specifically solar power, shows promise of a booming sector and business opportunities in East Africa (such as in Zimbabwe, Tanzania and Kenya).

One way to more accurately assess the commercial opportunity present for Renewable Energy within Africa, is by utilizing one of Decision Point’s Momentum tools.

Figure 4: Timespan 9/30/2018 – 10/30/2018 (1 month); Concept: Renewable Energy, Solar Geographical: Africa.

 

Data is predominantly concentrated in the ‘Strategic Push’ segment, with only a few singular data points located in ‘Commitment’, ‘Result Pressure’, ‘Confidence’ and ‘Defining Expectations’. This suggests a massive collaborative effort has been made to implement widespread use of renewable energy technology in the African continent. Abundance of data in the ‘Active Action’ segment of the circumplex points towards a push to make this alternative energy source commercially viable, by readily adopting it into the market.

 

Further inspection of the supporting data contained within reinforces this idea. Articles contained give insight into numerous projects aimed at contributing to the development of energy efficiency markets, such as Engie and Meridiam’s plan to develop 60 MW solar projects in Senegal, and SolarReserve & ACWA’s 20-year power purchase agreement with Eskom, South Africa’s public electric utility company committed to utilizing executing clean power projects, for a 100 MW solar thermal project in South Africa.

 

One such article cites the launch of the South African Development Centre to aid renewable energy development in the region, further disclosing the energy potential the region benefits from through abundant solar and wind sources (with an estimated potential for hydropower being from the current ~31 TWh/year to 1,080 TWh/year). Others include startup projects such as OneWattSolar’s implementation of blockchain fitted solar panels as a cheaper alternative to fossil fuels.

 

The continent still faces a long road ahead of it, with years to come before it will finally meet its energy goals. Nonetheless, current efforts suggest a lot of commitment towards attaining targets set, and since the process is in its earliest stages, a lot of opportunity. Since it is the most sun-rich continent, there is a heavy focus on solar power as the main source of renewable energy in Africa. Off-grid systems are favoured, since they can be independently managed from central control, and in collaboration with new technology, mobile money transfer networks are becoming increasingly more popular. At the same time, companies are also investing  in other options, such as hydropower and wind farms. Further, most projects are primarily focused in south and east africa, with a heavy focus on South Africa.