With big infrastructure projects taking shape across East Africa, developing a reliable power sector is now more important than ever, with technology, innovation and ingenuity becoming just as significant as cash and old-school connections, writes Martin Clark
East Africa’s energy sector development is entering a new, critical phase. It means the wait for reliable power must end soon if the region is to exploit its true potential.
With oil set to flow in Uganda by 2025, and a US$42bn gas export project taking shape offshore Tanzania, the whole region is experiencing a transformation.
New infrastructure being built for these and other projects – including a crude oil pipeline linking Uganda with the port of Tanga in Tanzania – will require dependable electricity supplies. Moreover, across the region, there are hopes, and even firm commitments, that these mega ventures will foster growth and opportunity for the people of East Africa. That means an upgrade to essential services and infrastructure, including power.
Increasingly, that is bringing a maturity in the solutions and tools being deployed to upgrade infrastructure and energy supplies. The days of mega schemes and sovereign statements, while not entirely over (see Ethiopia’s controversial Grand Renaissance dam and hydro project), are giving way to small-scale household solar plants, broad network and other infrastructure initiatives, all facilitated by new, fast-evolving technologies.
While electricity trading across the East African Power Pool (EAPP) remains small, there are clear moves to bolster regional connectivity, one of the tasks facing newly-appointed EAPP secretary general, James Karari Wahogo. That includes studies for two possible interconnections linking Ethiopia and Somalia, with a consortium of Cesi and Colenco now exploring a possible northern route (Jigjiga-Hargessa-Berbera) and a southern corridor (Negele-Dolo Ado-Mogadishu). Transmission infrastructure is capital intensive, so the involvement of agencies like the World Bank remains vital if the project is to succeed. Other interconnection schemes will bolster trading among Kenya, Tanzania and Uganda.
Bringing in private sector capital could unlock other development opportunities. UK-based Gridworks has been successful with its US$90mn Amari independent power transmission project in Uganda. Serving as a pilot scheme for the wider area, it entails the upgrade of the transforming capacity of four high-voltage substations at key points in Uganda’s grid: Tororo, Nkenda, Mbarara and Mirama.
This was followed in July with a similar project to develop and invest in Tanzania’s North East Grid transmission project, working alongside India’s Larsen & Toubro. It will include transmission lines from Dodoma (in the central part of the country) to Chalinze (to the East); Chalinze to Segera (in the Northeast); and Segera to Tanga (in the North), as well as associated substations work.
Tanzania hopes to build more than 9,000 km of high voltage lines, 12,090MVA of transformer capacity and 56 new substations over the coming decade, alongside 6,200MW of new generation capacity. The Government also hopes to enhance interconnections with neighbouring states like Zambia and Kenya, widening the scope for power trading.
Gridworks has also sought to leave its mark in Burundi. At the Africa Climate Summit, Virunga Power, a Gridworks investee company, revealed its plans with the national Government to launch a new privately-owned and operated electricity distribution company. Weza Power, the new entity, is expected to bring grid power to connect nearly nine million people and aims to raise around US$1.4bn over seven years to build a network of distribution infrastructure.
The scale of ambition and proposed investment in Tanzania and elsewhere spells opportunity for suppliers and contractors across the region. East Africa is already well-known as a market for diesel genset makers, selling portable power for businesses, offices and other critical infrastructure, like mines and hospitals, continues to draw interest from international firms.
Aksa Power Generation opened a Kenyan office two years ago to tap into emerging opportunities, while Turkey’s Teksan is also keen, reflecting the bullish outlook for the region’s growth. But well-known providers, such as Caterpillar, GE, Aggreko, have been supplying temporary or standby power solutions to businesses and utilities for years, at times on a huge scale, where local power supplies are severely squeezed, such as shortfalls from hydro plants after prolonged drought.
At the same time, these companies, alongside utilities and suppliers, are locked in a battle to improve environmental performance as part of ongoing sustainability commitments, a trend that will continue for years to come. It has already resulted in numerous power machinery upgrades in terms of emissions output and cleaner fuels, which have become increasingly important to buyers alongside traditional price and performance parameters.
But increasingly East Africa will look to harness its own resources – from geothermal and natural gas, to solar power and more hydro – to find long-term solutions to its energy needs.
As well as cross-border interconnectors and giant gas plants, this will likewise tap into the power of small, with Kenya among those looking to build solar mini-grids in remote parts of the country not yet served by any power grid. Nairobi hopes to construct more than a hundred such solar powered mini-grids to support homes and communities still left off mainstream electricity grids. It will rely on funding support from the World Bank and other donors, and mirrors similar moves elsewhere across sub-Saharan Africa.
Powered by solar panels, the grids use batteries and back-up generators to provide electricity independent of the main national power infrastructure. The surge in growth in mini solar projects, across homes, businesses and entire communities, is now seen as a quick-way to electrify untouched parts of the continent, much like the internet and cell phones helped Africa leapfrog its lack of fixed telephony services.
Another aspect of the equation is affordable power, an area which is drawing interest from innovative financial backers. In Kenya, industrial and commercial enterprises pay high grid tariffs ranging from US$13-20 cents per kilowatt hour (kw/hr) of electricity.
Starsight Premier Energy Finance (SPEF) is looking to bring down that cost by supporting commercial and industrial solar projects that also reduce carbon dioxide emissions.
Its innovative lease-to-own model means clients can lease a solar photovoltaic system for 12-15 years, after which the system is transferred to the client. The monthly lease payment includes the lease amount for the system, maintenance, insurance and spare parts – it allows the client to generate their own electricity for about US$6-8 cents per kw/hr.
For manufacturers, SPEF also offers an asset finance structure which allows clients to take advantage of investment allowances and further reduce the cost of their own generated power to as low as US$4 cents per kw/hr.
SPEF recently netted major investment from Dutch development finance house FMO and the Global Climate Partnership Fund in support of its work.