Presented by Nedbank

Africa needs to think differently to meet its big energy challenges

Africa has remained limited in terms of its ability to realise its full potential as the global economic growth driver it could potentially be.

This is despite undergoing a lengthy period of good economic growth and diversification, accompanied by real social transformation, said Mike Peo, Head of Infrastructure, Energy and Telecommunications: Nedbank Corporate and Investment Banking.

“The reason is simple. Africa doesn’t have the energy it needs to maintain and increase its forward momentum,” Peo explained.

There are many reasons for this, including:

  • A lack of investment into energy by Africa, and into Africa.
  • A general lack of access to coal in large parts of the continent.
  • The prohibitively high costs of energy distribution across vast expanses to reach the many rural communities and villages that characterise so much of the African landscape.

While that landscape is undoubtedly transforming as urbanisation increases at a stellar pace across the continent, the African demographic will always be vast and extensive.

“This reality makes the limitations of Western-style, centralised, big-grid power supply solutions blatantly obvious,” Peo added.

“Coupled with the world’s insistence that Africa reduces its reliance on fossil fuels to meet its energy needs, this presents the continent with real energy challenges – but also with many opportunities to deliver sustainable alternative energy solutions that can power the continent into the future.”

Interestingly, the timing for developing and implementing these types of energy solutions has never been better, since Africa now has a unique opportunity to capitalise on the vast global alternative energy resources that are becoming increasingly available.

“In many developed regions and countries, electricity demand has effectively been met thanks to the completion and activation of large-scale renewable energy projects,” Peo said.

“This means that the resources – human and technological – that were developed as part of the completion of these renewable energy projects are now available to be redeployed elsewhere in the world.

“This can, and should, be leveraged to Africa’s advantage, particularly given that the continent is enjoying significant attention and focus by global investors, especially in the energy sector.”

But to fully capitalise on this situation, three key considerations are now required from every country in Africa that has energy as a procurement priority:

  1. The first is a significant commitment to the development and implementation of enabling policy frameworks that include significant allowance for alternative and renewable energy investment of varying scales.
  2. The second is the implementation of enabling regulatory frameworks. Many African countries have a reputation for being difficult places in which to do business. This has to change if alternative energy is to have any hope of transforming the African economic landscape and powering its future development. Investors and developers need the security of knowing that they are able to enter into government contracts without fear that regulatory grey areas might derail their efforts down the line.
  3. The final component is the availability of bankable energy projects in Africa. This is where a paradigm shift away from big-grid electricity provision is needed. When one considers the large, and growing, numbers of energy solution developers and investors that are approaching banks – particularly in South Africa – to provide the financial backing that will allow them to build smaller-scale energy projects in Africa, it’s clear that this is the most logical and viable way forward for countries and communities.

“The importance of putting an alternative energy reality in place in Africa goes way beyond merely giving its peoples access to power,” Peo adds.

A fully powered Africa will also be in a position to capitalise on the massive economic opportunities waiting to be exploited.

Importantly, these opportunities are amplified if alternative energy projects are allowed to play a key role in the continent’s future.

The business and job creating spin-offs of renewable energy projects, for example, can be immense, as can the employability benefits of knowledge creation within a globally relevant industry.

“Add to these the obvious positive consequences of an entire continent meeting its energy needs in ways that do not impact negatively on global climate change levels, and the case for renewable and alternative energy projects to be given the priority they deserve in Africa, has become more than compelling.

“And it all starts with thinking differently,” he concludes.

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Africa needs to think differently to meet its big energy challenges