http://www.economist.com/news/middle-east-and-africa/21653618-falling-cost-renewable-energy-may-allow-africa-bypass?fsrc=rss%7Cmea
The leapfrog continent
The falling cost of renewable energy may allow Africa to bypass the
carbon-intensive sort—up to a point
Jun 6th 2015 | From the print edition
BRIGHTLY POLISHED mirrors flash light across the dusty khaki scrubland
of South Africa’s inhospitable Northern Cape province as they rotate
slowly to follow the sun, producing electricity for 80,000 homes. The
inauguration in March of this concentrated solar power (CSP) plant
costing 7.8 billion rand ($640m) is but the crest of a wave of
renewable energy projects sweeping across Africa.
Projects such as these cannot come quickly enough for a continent
starved of energy. In South Africa, where four more CSP plants are
already being set up, the economy has staggered to a crawl in the
first quarter of 2015 because of crippling power shortages. Across
sub-Saharan Africa shortages of electricity are holding back economic
growth by as much as 4% a year, reckons the World Bank. Businesses are
forced to buy generators, paying 50 cents or more per kilowatt-hour,
which is many times the cost of grid power.
It is not just energy-intensive industries that are stunted. So too
are dairy farms in Nigeria (see article) or even businesses that sell
mainly brainpower. Ozioma Obiaka, the founder of TalentBase, a firm
based in Lagos that provides payroll and other software to companies,
says he often has to send employees home early because the power conks
out.
Poor families are even harder hit. A new report by the Africa Progress
Panel, a group of experts led by Kofi Annan, a Ghanaian who once
headed the UN, reckons that more than 600m poor people do not have
access to grid electricity. They may spend as much as 16% of their
income on energy and pay up to $10 per kWh for fuels such as kerosene
or disposable batteries for cooking and lighting: about 100 times more
per unit than people in the richer world.
Reducing the number of people and companies without access to reliable
grid electricity may require investment of as much as $55 billion a
year, compared with current investment of about $8 billion, the panel
reckons. Yet it is starting to increase. McKinsey, a consulting firm,
reckons that generation capacity installed by independent power
producers has increased at the rate of more than 14% a year since
1992.
Much of the investment into new power is going into fossil fuels, such
as coal or gas-fired generation. But an ever-growing share is going
into renewable sources. In 2010-12 Nigeria’s renewable power
production posted the world’s fastest growth, at more than 15% a year,
according the World Bank’s latest assessment.
Across Africa a relatively simple technology is reviving: CSP, which
uses the heat of the sun to make steam and in turn electricity.
Although it is chunkier than photovoltaics, which makes electricity
directly from sunlight, it can store some of the heat and keep
producing power for a couple of hours after the sun sets. Africa is
leading the embrace of this idea: it hosts six of the ten biggest CSP
plants being built around the world.
Big dams and hydropower offer even greater potential. McKinsey reckons
they could provide about 15% of Africa’s power by 2040 compared with a
little under 10% from solar power. Ethiopia will increase its
electricity production more than four-fold from 4 gigawatts in 2011 to
17GW by 2020. A large chunk of this will come from the Grand Ethiopian
Renaissance Dam.
Although renewable energy in Africa will not overtake all fossil
fuels, it will overshadow the dirtiest of them, coal, which now
produces more than half the continent’s power. That figure will
probably shrink to 23% by 2040, says McKinsey.
What accounts for this sudden rise in renewable energy? One big reason
is that Africa has some of the world’s best untapped resources, such
as huge rivers that are not yet dammed, sunny deserts and windy
uplands. For years engineers have looked longingly at the Congo river
where it plunges down the Inga falls, between Kinshasa, the Congolese
capital, and the Atlantic ocean. This could be by far the world’s
biggest hydropower station, generating almost 40,000MW, 20 times what
the vast Hoover dam in the United States produces. Now the World Bank
is funding studies of how to dam it.
A second reason is that many renewable energy sources can be built
quickly to meet immediate shortages. South Africa has added more than
4,000MW of renewable power to its grid in just four years, producing
about 10% of the country’s total energy. Many big coal-fired power
stations have taken decades to plan and build and are still not
producing power. Costs per unit of electricity from renewable sources
have fallen almost 70% in South Africa as it has run successive
auctions, offering to buy power from the cheapest supplier.
Another reason is the high cost of existing supplies in much of
Africa. Though solar and wind power may not yet be cheaper than coal
or gas, they are much cheaper than running a generator in the back
yard. Netcare, a South African private-hospital group, is putting
solar heating and electricity into 35 of its hospitals in the coming
years to offset an increase of 160% in its energy costs since 2009.
Renewable energy can also supply villages that are not connected to
the main grid much more cheaply than extending power lines to remote
areas, where connection costs run to several thousand dollars per
customer.
This dash for renewables could speed up even faster. Prices for solar
panels have dropped by more than half in recent years and should keep
falling. Given the right regulatory environment and access to finance,
Africa should leap ahead as one of the world’s leading producers of
clean energy—making the continent richer as well as greener.
>From the print edition: Middle East and Africa
Received on Thu Jun 04 2015 - 21:54:32 EDT