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Over 70% of Africa's energy to come from renewables

Jan 31 2017 13:42
Lameez Omarjee

Johannesburg –  By 2050 about 77% of Africa’s energy capacity will be driven by renewables.

This is according to Fransje van der Marel, partner at McKinsey & Company, who was speaking at a breakfast at the fifth annual Africa Power roundtable held at Webber Wentzel in Sandton on Tuesday. 

Van der Marel explained that energy demand is expected to double by 2050. However the good news is that Africa has the capacity to supply this energy. Analysis by McKinsey & Co's Energy Insights report shows that there is more than 7 000GW capacity potential across the continent, and that is more than 100 times of capacity currently installed in South Africa.

About 77% of this capacity will be renewable in the form of solar (48%), wind (29%) and gas (13%).

“There is an immense amount of solar capacity,” said Van der Marel. This is especially true with the cost of renewables having come down “massively” in the past 10 years. In dollar terms this is down from 20.4c/kWh in 2006 to 4.1c/kWh in 2015. 

READ: 5 reasons why Eskom is wrong about renewables costs – CSIR

Van der Marel explained that although supply was not a problem, connecting the supply to the demand is. “The real problem is connection. We have supply but we need to connect to demand.”

The lack of transmission and distribution capacity is preventing Africa from reaching its full potential. About half of the world’s population which does not have energy, lives in Africa. Further, the rural electrification rate across the continent is only 28%.

She added that across the continent there is a move to focus on making electricity accessible. The African Development Bank has recently established a new deal to have 95% rural access to electricity by 2030, in line with the United Nations Sustainable Development Goals. The organisation Power Africa has a goal to supply 30 GW and 60 million new connections by 2030. Africa Power Vision also has a goal of 80% access by 2040.

SOURCE: Rystad Energy database, rystadenergy.com; US Energy Information Administration: International Energy Statistics (2013); The World EnergyCouncil, London, UK, World Energy Resources: 2013 Survey, October 2013, worldenergy.org; Geothermal Energy Association's 2012 International Market Overview Report; Wind Energy Resource Assessment, National Renewable Energy Laboratory, 2013, nrel.gov

ALSO READ: Renewables have no financial benefits for Eskom - Koko

The private sector is also starting to participate to ensure accessibility. This shows that energy generation capacity is not just a government role only, said Van der Marel. In South Africa there are 38 or 5% of Independent Power Producers (IPP). “This is a big change compared to 10 years ago,” she said.

The role of IPPs in other African countries is much higher. In Ivory Coast IPP comprise 57% of generation capacity, Gambia 42% and Rwanda 38%.

Technology will also play a pivotal role in energy access. Up to 42% of people in the continent are expected to be serviced through off-grid or mini-grid solutions by 2020. Where it is difficult to power rural areas with limited infrastructure, Van der Marel explained off grid solutions could fill the gap. “Now that we have off grid solutions we can power people far away.”

Van der Marel added that recent global developments show a growing trend of nationalism and less cooperation, and even less trade. But resolving the energy challenge in Africa requires collaboration across countries.

Read Fin24's top stories trending on Twitter:

africa  |  ipp  |  economy  |  energy  |  solar  |  renewable energy
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