Charting Africa's Energy Future by GaffneyCline
Introduction
To imagine the future we really need to understand the present, the point from where we are starting.
When it comes to energy and a transition to the future, I think it is fair to say, that today Africa has a unique starting point with a number of unique challenges;
The Challenges
1. Access to Energy
The region consumes least amount of energy (per capita) of any region globally, 20th (5%) of an American and an 8th (12%) of European consumption.
Energy consumption in the region (per capita) has remained persistently low and unchanged for over four decades.
Yet the population is continuing to grow and according to the UN by 2050 a quarter of the Worlds population will reside on the continent.
The African Development Bank has estimated that 90MM people per year to the continent needed to be connected to electricity and 130 MM people per year shifted from cleaner energy sources for cooking to meet UN universal energy access goal by 2030.
2. Access to Finance
Availability and cost of capital is crucial for the improving the production and access to energy.
At COP15 in 2009 developed economies committed to provide $100B per year to for climate action in developing countries, at COP21 it was reiterated and extended to 2025 but not yet achieved.
But ADB estimates that Africa will require an estimated $100B per annum up to 2040 to support an Energy Transition.
Investment from China peaked in 2016 at just under $30B and in 2020 was less than $2B.
In 2022 G7 committed to ending public finance of fossil fuel development overseas, although interest in investment has been rekindled with energy security challenges.
3. Global drive to decarbonise towards Net Zero
In a World that is looking to rapidly and radically decarbonise it energy mix within the first half of this century.
Increasing the electrification of the energy system looks very likely and a fundamental change in the global energy mix.
>110 countries have committed to net zero emissions by 2050.
Europe a key energy market has legislated for Net Zero target by 2050 and emissions reduction of 55% within the decade.
In 2022 Africa contributed just 2% of global emissions, yet it is already experience the early impacts from climate change.
Mark Wilkie, Carbon Management Director at GaffneyCline
Common global view of the Energy Transition, particularly in the developed economies, is a trilemma with the challenge of transitioning whilst maintaining Affordable, Sustainable and Secure supply of energy.
Africa’s immediate Energy Transition challenge is to secure supply and provide access to energy for its population.
The Opportunities
Despite these significant challenges Africa does possess a number of unique opportunities to transition towards a new Energy Future
1. Energy Resources
The continent abundant energy resources above and below ground.
Rich in renewable sources with,
. Around 25% of global geothermal potential for power generation High grade geothermal resources along the rift valley in East Africa.
. Phenomenal Wind and Solar resources.
. Holds 12% of the worlds hydropower potential currently supplies 17% of electricity in the continent.
Rich in hydrocarbon energy,
. ~7% of proven global gas reserves and ~7% proven global oil reserves.
. With natural Gas is seen as a key global transition fuel to displace liquids and for conversion into low carbon Hydrogen.
2. Mineral Resources
30% of global mineral wealth, African mining will play a critical role in supplying the materials needed to meet the world’s emissions targets.
Africa possesses many of the minerals critical to the technologies expected tod rive the energy transition.
continent produces more than 70% of the world’s cobalt (DRC-Zambia), 60% of manganese (Gabon, South Africa), 25% of bauxite (Guinea), nearly 15% of copper (“copper belt” of the DRC-Zambia).
3. Unencumbered by pre-existing energy system
Flip-side to low energy access is that it leaves scope to design and develop for the Energy Future.
With mix of localized micro-infrastructure e.g. for micro-grid solar pv as well national utility-scale infrastructure.
Providing the potential to leap-frog to a lower carbon energy system (analogue with access to telecoms in the region foregoing development via fixed line infrastructure).
Despite the significant challenges Africa possesses significant opportunities through its energy resources, minerals and the scope to structure its energy system that will enable it to transition to a new Energy and Economic Future and potentially play a significant role in the global Energy Transition.
Charting Africa’s Energy Future
What does the chart for Africa’s Energy Future look like?
Yesterday we had a great discussion with Energy stakeholders from across the region including; Angola, Ethiopia, Gambia, Somali and Tunsia.
Unsurprisingly there is no one size fits all solution for the entire region, however there were several areas of consensus applies across the region:
Access to energy is crucial for the development of the continent and the wellbeing of its population should be the starting point of Africa’s Energy Transition
Access to funding does not mean subsidy or donations but affordable capital for investment in projects, there is perhaps and opportunity to explore;
· options for domestic financing of projects e.g. through national-bonds.
. reducing reliance on international lenders.
A mixed approach of micro-scale energy systems to accelerate access to energy along with investment in large utility scale energy systems to support scaling of industry.
Fostering of inter-regional cooperation with a view to developing regional power pools.
Natural Gas as a game changer; a transitionary fuel enabling new power generation, a source for low carbon hydrogen and its vectors such as ammonia, methanol and urea for the production of low fertilizers and improving agricultural productivity.
Need for energy master planning considering the challenges and opportunities to chart the new Energy Future for each individual country within the region.
To chart the Energy Future;
There needs to be a recognition of the region’s unique starting point in the transition.
There needs to be energy master plan that addresses both the challenges and the opportunities for each individual country within the region.
The starting point of that future should perhaps be the end to the inaccessibility to energy for the regions’ population.
