Powering Africa in 2022 and beyond: how technology, innovation and uncertainty will characterise energy development in the continent through the coming decade and beyond
Africa’s power sector is likely to be characterised by increased innovation and ongoing uncertainty in the years ahead, as clean technologies start to displace traditional thermal energy. It creates an uneven future outlook, but the good news is that the funding is there for the right projects.
For policymakers, economic development remains priority number one - but not at all costs. The advent of more competitive renewable energy, and a pressing political agenda determined to get to grips with climate change, will steer overall development.
Yet some context is needed here. Africa’s power sector contributes less than 2% of global CO2 emissions, and South Africa accounts for a large proportion of that. Thus, in objective terms, global warming is not top of the agenda for most African states; economic and social development remains the number one goal.
But, luckily, the least-cost power sources are now also the most environmentally sustainable, according to Professor Anton Eberhard of the Graduate School of Business at the University of Cape Town.
“Solar and wind energy, and geothermal in some countries, are the cheapest grid-connected sources of electricity. Solar PV offers an increasingly competitive option for mini-grids and off-grid applications.”
The variability of solar and wind energy, however, needs to be complemented by flexible resources such as hydro, pumped storage and batteries, and some countries are continuing to invest in gas turbines. It is creating an increasingly fragmented infrastructure, incorporating diverse generation and multiple grid systems, both large and small.
Perhaps there are some certainties, though. “New coal power plants are unlikely to be financed,” says Eberhard. “And nuclear energy is mostly a pipe dream in Africa, with the exception of North and South Africa.
“Conventional nuclear reactors are too expensive and their scale is a poor fit for the small power systems of most sub-Saharan countries. Small modular nuclear reactors are not yet commercially available.”
Battery storage
In some ways, Africa now occupies a unique place in the world’s energy transition. Many countries have leapfrogged the development of conventional energy to focus almost exclusively on renewable energy. However, this itself can present its own problems, notes Corinne Duvnjak, counsel in the Clifford Chance international projects team in Paris.
“With renewable energy comes the associated challenges of intermittent renewable energy and the difficulty of integrating variable sources of electricity onto the grid,” she says.
A key to solving the problem of intermittent renewable energy resides in battery storage. “As battery storage options become more reliable and less costly, we can expect a large number of renewable energy plants to convert to battery storage, or new renewable energy projects being developed from the outset with battery storage technology in the coming years.”
Indeed, battery storage is already proving itself in some challenging environments.
Caterpillar dealer Tractafric recently installed 7.5 MW of battery energy storage capacity for the micro-grid at Barrick Gold’s Kibali mine in the Democratic Republic of Congo (DRC).This provides grid stability, while a Cat Master Microgrid Controller integrates up to 45 MW of power generated by three hydroelectric stations and 36 Cat 3512 diesel generator sets.
Other mining and industrial groups will be watching closely to see how the micro-grid performs.
Creative solutions
At the the same time, some large thermal projects are still being completed, while hydro is also attracting significant funding - the grandest of them all being Ethiopia’s controversial Grand Ethiopian Renaissance Dam (GERD), which is reported to be edging closer to commissioning.
In South Africa, Voith Hydro recently completed the modernisation of three generators at the Drakensberg pumped storage plant, the second largest such facility in the country with an installed capacity of 1,000 MW.
Given its historical dependence on coal, South Africa perhaps faces the greatest transition challenge of them all, although the recent discovery of offshore gas may help in the years ahead. Financing is also adapting to all the changes, as the power sector embraces new technologies and distances itself from others.
Development finance institutions (DFI) remain integral to making things happen.
“DFIs are still the lynchpin for standard project financing across much of Africa, and they are slowly shying away from gas-fired projects, having long ago stopped funding coal-fired projects,” says Scott Mackin, managing partner, Denham Capital.
Financing may still come from Asian export credit agencies or the like and some commercial banks, he adds. However, the institutional pressure against financing even gas continues to mount.
“Still, given renewables’ intermittent nature, gas and hydro are certainly necessary until energy storage technologies mature and become capable of filling the large gaps.”
Hydrogen economy
In the longer term, it is expected that the advances in hydrogen will impact Africa’s energy sector greatly.
“The most notable development shaping Africa’s energy future is the research, development, and implementation of hydrogen,” says François-Guilhem Vaissier, a partner at White & Case.
“The current leader is Morocco, which continues to build momentum, particularly with green hydrogen due to an ambitious policy, massive planned investments, and strategic support from Germany. There are even plans to develop the first high-volume green hydrogen production plant in Africa. Other African economies should follow soon.”
One of them is Egypt. Here, MAN Energy Solutions and its strategic partners are working on a pilot project to produce green hydrogen to fuel domestic tourist buses. It comes after Egyptian President Abdel-Fattah el-Sisi called for the establishment of an integrated green hydrogen strategy, utilising renewable energy instead of fossil fuels.
Ghassan Saab, head of MAN Energy Solutions’s energy business in the region, called it an exciting venture “in a country that has recognised what an incredibly important role green hydrogen will play on the path to a climate-neutral global economy.”
