“…at today’s rate of progress, the world is NOT on track to achieve SDG7” (Tracking SDG7: 2021 Energy Progress Report)
There is no better way to start and forecast the activities for the year than to look back into previous years regarding the activities in the energy industry. I will be taking readers on a journey through several reports and findings from credible institutions in the industry.
Based on data from the World Bank, as of 2019, only 46.75% of the population in Sub-Saharan Africa (SSA) had access to electricity, with the lowest access rate in South Sudan at 6.7% and the highest access rates in Mauritius and Seychelles at 100%. (It is no wonder that they are sought after tourism destinations, if at all there is a correlation, but the numbers say a lot).
COVID-19 has been said to further widen the electricity access gap. According to the International Energy Agency (IEA), while the number of people without access to electricity witnessed a steady decline from 2013, the effect of the pandemic since 2020 has exacerbated the electricity access gap in SSA, thus pushing many countries farther away from achieving the goal of universal access by 2030. Furthermore, population growth is seen to outpace electricity access rates across the region. Nevertheless, some countries have taken great strides at improving individual electrification rates. In Kenya for example, the access rate rose from 20% in 2013 to almost 85% in 2019. The growth in electrification is attributed to increased grid connections but more importantly increased deployment of off-grid systems. The effect of the pandemic has shifted the priorities of most governments in SSA to alleviate energy poverty which in effect has slowed down activities in the decentralised energy access agenda. The IEA posits that mobilising development finance institutions and donors is critical to ensuring that energy access progress continues.
According to IEA estimates, in 2030, 50% of the global population without access will be concentrated in 7 countries- Democratic Republic of Congo, Nigeria, Uganda, Pakistan, Tanzania, Niger and Sudan. Governments will need to put access at the heart of recovery plans and programmes.
The least expensive way to achieve universal electricity access in many areas is estimated to be via renewable energy sources, in addition to increasing grid-connected electricity generation from renewables, declining costs of small-scale solar photovoltaic (PV) for stand-alone systems and mini-grids, particularly for rural areas in SSA.
Based on the Tracking SDG 7: 2021 Energy Progress Report, about 759 million people still lack access to electricity with half living in fragile and conflict-affected settings and 84% in rural areas. Access rate will have to more than triple in SSA between now and 2030 which would mean connecting around 85 million people each year through 2030. The three largest deficit countries (Nigeria, Democratic Republic of Congo, and Ethiopia) are in SSA.
On Renewables, from the 2021 Renewable Energy Statistics compiled by IRENA, Renewable electricity generation in 2019 was 361 TWh higher than in 2018, an increase of 5.5%. In 2019, the total amount of electricity generated from renewables was 6,963 TWh, with Africa generating 171 TWh in 2019.
Although renewables have witnessed increased growth, the deployment of renewables are still far from what is required to achieve meaningful decarbonization of the energy sector. Cost reductions and intensified policy support are therefore vital. The IEA and IRENA estimate that solar PV and wind will account for most renewables-based electricity generation by 2030. In 2021, solar PV alone accounted for more than half of all renewable power expansion followed by wind and hydropower. In its Renewables 2021 (Analysis and forecast to 202) report, the IEA posits that renewables are the backbone of any energy transition to achieve net zero in line with the COP26 climate goals which are set to propel renewable electricity growth to new heights.
Globally, renewable electricity capacity is forecast to increase by over 60% between 2020 and 2026, reaching more than 4,800 GW, equivalent to the current global power capacity of fossil fuels and nuclear combined. Nevertheless, in terms of dispatchable renewables expansion which is critical to support the integration of more wind and solar, the growth forecast is slow due to relatively high costs, lack of policy support and limited remuneration of flexible and dispatchable renewables.
In terms of prices, increasing commodity, energy and shipping prices have increased the cost of producing and transporting solar PV modules, wind turbines and biofuels all around the world, with restrictive trade measures in the United States, India, and the European Union, also serving as a contributory factor. The attendant risk is a heightened delay in the delivery of contracted capacity resulting from commodity price shocks. Nevertheless, the higher prices for natural gas and coal have improved the competitiveness of wind and solar PV.
With the right policies and regulatory framework in place alongside feasible implementation measures, the IEA estimates that economic recovery spending on renewables can unleash a huge wave of private capital.
Proposed measures to address existing challenges include:
Addressing permitting and grid integration challenges in advanced economies.
Putting a halt to stop-and-go policies and developing more consistent policies in emerging and developing economies.
Increasing grid access and availability in emerging and developing economies in addition to infrastructure development.
Securing off-takers’ financial health through viable models and structures in emerging and developing economies.
In terms of hydrogen production from renewables, there is an increasing policy momentum which indicates that global electrolyser capacity for hydrogen could stimulate the deployment of 18GW of additional wind and solar PV capacity in the 2021-2026 period.
Biojet technology is also on the cards as global biojet demand is estimated to range from 2 to 6 billion litres by 2026 based on IEA case estimates.
Governments need to address current policy and implementation challenges to get renewables on track with net zero by 2050 and there needs to be increased ambition for renewable energy uses for dispatchable renewable electricity, renewable energy use in buildings, industry, and transport, etc.
On a positive note, in the REN 21, Renewables 2021 Global Status Report, renewable energy set a record in new power capacity in 2020 and was the only source of electricity generation to register a net increase in total capacity with increased investments in the year. The highest share of renewable energy use was in the electricity sector estimated at 26% deployment rate, although total final energy consumption (TFEC) remained low, increasing only moderately on a year on year basis. 2020 is posited to be an important milestone for climate change policy as many countries greenhouse gas (GHG) targets for the year expired and many countries set new targets with many also committing to carbon neutrality. Some policy mechanisms implemented in 2020 included- fossil fuel bans and phase-outs, GHG reduction targets, and carbon pricing and emission trading systems, etc. Corporate commitments to renewable energy also increased, occasioned by market-based drivers, particularly the heightened action on climate change.
However, does this important climate change policy milestone translate to an increase in energy access and a resultant decrease in energy poverty across SSA.
While taking an exercise in forecasting, Power Africa in its Energy Foresight Report (for Off-Grid Energy in 2030), forecasts that the increasing frequency and severity of extreme weather and natural disasters through 2030 and beyond driven by climate change will pose a significant risk to the growth and development of countries in Sub-Saharan Africa, resulting in people abandoning their homelands due to the persistent shocks occasioned by climate change, changing weather conditions, prevalence of diseases due to increased temperatures, etc. Climate adaptation strategies will need to factor off-grid solutions including containerized solar powered solutions, productive uses of energy (PUE), flexible and modularized off-grid infrastructure, etc.
To effectively adopt, adapt and possibly develop strategies for increased electrification, electricity access and any climate adaptation strategies across SSA countries, the regulatory environment must be one that attracts and enables investments to thrive to achieve increased access in the respective electricity industries.
To assess key areas of country regulatory frameworks and provide a reference source for regulatory development in Africa, the African Development Bank since 2018, developed the Electricity Regulatory Index for Africa (ERI). In its 2021 (fourth edition), 43 countries were covered and assessed based on three pillars or sub-indices: the Regulatory Governance Index (RGI), the Regulatory Substance Index (RSI) and the Regulatory Outcome Index (ROI). The findings from the report revealed that:
Uganda is the top performing country in the 2021 ERI with other top performers being Kenya, Tanzania, Namibia, and Egypt as these countries have well developed electricity regulatory frameworks with the necessary regulatory oversight capacity by their regulators, thus capable of achieving measurable outcomes.
Regulatory Independence remains the weakest sub-indicator under RGI with significant government influence on regulatory authorities in 93% of the surveyed countries.
Performance in Economic Regulation and Licensing Framework sub-indicators were the lowest under RSI.
In 40% of the countries surveyed, no simplified licensing procedures or framework exists for off-grid and small-size systems.
Thus, accessing long term sustainable funds needed to achieve universal access to electricity is a significant barrier for most countries.
Proposed recommendations include:
Amendment of the regulatory acts to enhance regulatory independence.
The need for well-developed tariff methodologies with appropriate pricing and indexation mechanisms.
The need for enhanced regulatory frameworks that are transparent including light-handed frameworks for small and off-grid systems, etc.
The long-term funding conundrum is further heightened by the decreased investment appetite for fossil based resources which constitute a major share in the energy mix of SSA. Looking ahead from 2022, stakeholders and Investors are geared to divert funding availability to clean energy technologies.
Nevertheless, in a recent and shocking development, the European Commission (EC) seeks to propose labelling natural gas and nuclear power as green energy sources as part of the European Union’s (EU) classification scheme for energy investments. This may have been occasioned by heightened energy demand which non-fossil fuel based energy sources/renewable resources are unable to meet in the short term, thus spurring an increase in energy prices or also because of the variable and intermittent nature of renewable resources in grid integration plans with insufficient storage capacity to address short term back up requirements, thus necessitating the need for increased base load capacity best served by conventional power generation dispatchable technologies.
The EC considers that there is a role for natural gas and nuclear to facilitate the transition towards a predominantly renewable-based future. If approved, it is posited that the label will apply to industries that generate about at least 80% of all GHG emissions in the region.
All hope may not be lost for SSA and Africa in general as it is hoped that a case can be made for Natural Gas and Nuclear Power Production, particularly Natural Gas to serve as a gateway for Africa to transition to a ‘renewable-based future’, albeit on a longer trajectory. However, the issue for debate is whether natural gas and nuclear stand a chance to be considered as ‘Green’ energy sources. This will be discussed in a subsequent post.