Unlocking opportunities to scale up clean energy in Africa

How clean energy can contribute

With 37 ratifications as of early May, which represents a 68% ratification rate, Africa is among the regions that have most ratified the Paris Agreement. This is a demonstration that the region has recognised the opportunities inherent in the agreement.

Among other indications is the formulation of their Nationally Determined Contributions (NDCs), to which all 54 countries on the continent have submitted. A majority of these NDCs prioritise climate-proofing developments in agriculture and energy, as well as the restoration of ecosystems. These are the fundamental economic sectors in the region capable of accelerating socio-economic transformation, as indicated in several national development agendas and the African Union’s Agenda 2063.

Integrating clean energy with agriculture driven by ecosystems-based adaptation (EBA) will allow the implementation of the Paris Agreement in a way where both climate and socioeconomic objectives are actualised at the same time to achieve several Sustainable Development Goals (SDGs).

Institutions of higher learning across the continent should prioritise the development of globally competitive renewable energy programmes and courses.

For example, in Kenya, an EBA farm using efficient, solar-powered micro-irrigation is saving farmers over USD10 000 annually in operating costs. These farmers are generating up to USD30 000 per acre annually. This is combating community-level poverty while enhancing food security – these are SDGs 1 and 2. This system is conserving up to 1,9 billion litres of water annually and enhancing climate resilience, while offsetting carbon by generating up to about 65 000 kWh of clean energy.

Read: African Union announces $20 billion renewable energy initiative

However, to fully unlock this potential, a number of barriers to up-scaling clean energy will need to be addressed:

With 37 ratifications as of early May, which represents a 68% ratification rate, Africa is among the regions that have most ratified the Paris Agreement. Photo: Facebook/We The Planet

Addressing policy barriers  

If we want to maximise the adoption of clean energy, policy will be the biggest driver of change. However, diversifying clean energy investments beyond the domestic application to include agro-industrial applications will need the harmonisation of policies across multiple ministries.

For example, agriculture policies will need to reconcile with industry policies, energy policies and lands policies, as well as with private investors. In particular, investments in rural roads will need to be prioritised to ensure the efficient connection of production areas and value-addition centers with markets and collection points.

Land and planning policies will need to set aside special economic zones with favourable incentives to attract investors in clean energy agro-processing plants. Trade policies will also need to facilitate access of agricultural goods to both local and export markets. Cumulatively, this harmonisation will create the enabling market conditions to drive demand in clean energy for agro-industrial applications.

Africa will also need to invest in relevant applicable technologies and technical capacity. Our over-reliance on imported technologies and expertise at the expense of developing local clean energy industries means the continent is limited in its technological choices. This is a disincentive to fully exploiting the resource, especially where unique physical limitations, such as unfavourable topography not shared by other regions, exist.

The only way to overcome such limitations would be investing in context-specific research and development in order to develop a competitive local clean energy technology industry. Institutions of higher learning across the continent should prioritise the development of globally competitive renewable energy programmes and courses.

Another key area for governments to reform is oil subsidy policies that incentivise the use of fossil fuels while dis-incentivising clean energy.

Tariffs and Subsidies–

Another key area for governments to reform is oil subsidy policies that incentivise the use of fossil fuels while dis-incentivising clean energy. Some oil-rich countries on the continent spend up to 30% of their budgets, amounting to over USD7 billion annually on oil subsidies. Such monies should be re-channeled to incentivise the development of a clean energy industry in Africa. This is vital if these technologies are to be made affordable.

A reduced tax rate, tax credits and exceptions could also be offered to organisations that enhance the use of renewable energy, especially those facilitating the technology transfer, research and development to contextualise these technologies for Africa.

Beyond tax-based incentives, countries can improve their Feed-in Tariff policies to ensure a higher rate in order to encourage the increased generation of clean energy to power national grids. A good example is the Renewable Energy Feed-in Tariff (REFIT) in Kenya, which was adopted in 2008 and revised in January 2010.

The REFIT aims to stimulate market penetration for renewable energy technologies by making it mandatory for energy companies (or utilities) to purchase electricity from renewable energy sources at a pre-determined price. This price is set at a level high enough to stimulate new investment in the renewable sector. This, in turn, ensures that those who produce electricity from renewable energy sources have a guaranteed market and an attractive return on their investment. Kenya’s REFIT covers electricity generated from wind, biomass, small hydro, geothermal and biogas, with a total electricity generation capacity of 1300MW.

Leverage Geopolitical Advantages

While the continent has a high theoretical potential for renewable energy, the coverage is not evenly distributed. For example, the continent’s up to 15GW geothermal potential is found along the Great Rift Valley only, which means it is concentrated in about 10 countries. Seventy percent of its hydro potential, estimated at 1852TWh annually, is concentrated in central and east Africa, while most of its estimated 1300GW wind potential is confined to east, southern and north Africa.

Countries should leverage on this uneven distribution to gain geopolitical advantages, which will incentivise investment in renewable energy development. For instance, Ethiopia, a landlocked country, is leveraging its vast hydro potential to generate surplus electricity, which is then sold competitively to Djibouti, a neighboring country. This gives Ethiopia favourable access to Djibouti’s sea port. Such leverage is an incentive for Ethiopia to invest in exploiting its vast renewable resources.

Failure to leverage this geopolitical advantage will constitute a disincentive for clean energy investment. Countries with significant renewable potential who are surrounded by neighbours with power deficits should study their geopolitical advantages and use them to inform their planning policies.

Read: 5 African countries embracing wind energy

Ethiopia, a landlocked country, is leveraging its vast hydro potential to generate surplus electricity, which is then sold competitively to Djibouti.

Financing clean energy

Electricity demand in Africa is projected to triple by 2030, requiring investment of up to USD70 billion annually. The continent will need innovative but practical financing solutions if it wishes to bridge this gap. Fintech, the combination of information communication technology (ICT) and financial services, is one way to do this.

In Kenya, M-Kopa is leveraging on the M-Pesa mobile money solution to provide flexible payment options to provide decentralised pay-as-you-go solar lighting solutions. Through this model, M-Kopa has electrified up to 400 000 rural homes across east Africa in direct fulfilment of SDG 7. By reducing indoor pollution to enhance health it is also indirectly fulfilling SDG 3, and by facilitating clear lighting for children to study, it is meeting SDG 4.

Even though most African countries have ratified the Paris Agreement and vast renewable energy potential exists on the continent, its contribution to sustainable development is not pre-ordained. It will take deliberate actions by countries on the continent to prioritise investment that will spur socioeconomic development while offsetting carbon emissions and protecting ecosystems. Let us therefore put aside our fine words, pick up our tools and start to actualise the glorious promise of the SDGs for ourselves and future generations. In the words of a famous Africa proverb, “A roaring lion kills no game.”

Dr. Richard Munang is Africa Climate Change & Development Policy Expert. He tweets as @RichardMunang

Mr. Robert Mgendi is the Adaptation Policy Expert

The views expressed here are those of the authors and do not necessarily represent those of the institution with which they are affiliated.

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