Alternatives Now A Viable Option - African Business Magazine
Alternatives Now A Viable Option

Alternatives Now A Viable Option

After decades of planning and discussion, the African continent is finally beginning to take renewable energy seriously. Many governments had considered wind and solar projects to be suitable only for the industrialised nations that caused global warming in the first place. Yet falling renewable energy production costs and high oil prices have convinced many that low-carbon power production is a commercial option, even where oil and coal feedstock is readily available. Neil Ford reports.

Most African homes still lack access to electricity and power demand across the continent as a whole is growing by an average of 7GW (7,000 MW) a year. Thermal power plants and large hydro schemes may form part of the solution but there is an increasing recognition that renewables can inject much needed diversity into the generation mix. The African Development Bank (AfDB) estimates Mauritania’s wind power potential, for example, at about four times its annual energy needs.

Achim Steiner, the executive director of the United Nations’ Energy Programme (UNEP) says: “The continent has abundant renewable resources that, with the right kind of public policies in place can unlock a new development future and light up the lives and the livelihoods of millions of people.”

This is likely to become the most attractive technology in the long term but wind power will make the most impact on African power production over the next decade. According to statistics from the Global Wind Energy Council, Africa had just 1,093 MW of installed wind energy generating capacity at the end of 2011, with just over half of it in Egypt alone.

Agostinho Zacarias, a coordinator for the United Nations Development Programme (UNDP), says: “Africa is generally aware of the importance of renewable energy as a business case, but has not yet figured out the most viable investment strategy to employ. The most prominent constraint is meeting the costs for project start-ups such as feasibility studies, environmental impact assessments and pilot project implementation, most of which should be met by public funding and/or guarantee.”

Unlike in Europe, some states of the US and many parts of Asia, most African countries have yet to set targets on the amount of renewable energy generating capacity to be installed.

However, the government of Morocco has set a goal of achieving 2GW each of wind and solar power generating capacity by 2020. It has also set a target of increasing the proportion of renewables in the production mix to 20% to 2020, in line with EU goals. Unlike the other four North African states, it is forced to import coal, oil and gas feedstock for its thermal power plants and so is eager to promote renewables in order to strengthen its energy security.

Morocco’s wind energy target is likely to be achieved, given that the country had 291MW of wind power capacity by 2011 and another 1GW is at various stages of development.  In April, Morocco’s state owned Office National de l’Electricité (ONE) awarded a contract to develop the 150MW Taza wind farm to a consortium of EdF Energies Nouvelles, Mitsui and Alstom.

Also in April, ONE and French firm Theolia launched a tender to develop the first 50MW phase of the 300MW Koudia al Baida wind farm. Elsewhere in the country, Nareva Holding is developing two 50MW wind projects: the Haouma scheme close to Tangier and the Foum El Oued venture in Laâyoune. Siemens will supply turbines for both projects. The chief executive of the company’s wind power division, Felix Ferlemann, said:  These two wind turbine orders mark Siemens Wind Power’s entry on the African wind energy market and clearly show that our internationalisation strategy is successful. The chief executive of Siemens Africa, Siegmar Pröbstl, added: “As an integrated technology company Siemens is able to provide answers that Africa needs to tackle many of its infrastructure challenges … From wind turbine technologies that produce clean energy to technologies that can get electricity to the 560m Africans who don’t have access.

South African target

Under its new energy strategy, the South African government has set a target of ensuring that 42% of all new generating capacity should be supplied by renewable energy schemes, whether by state owned utility Eskom or by private sector operators.

Eskom, which currently controls 90% of all power production in the country, will face increased competition; but on the other hand, it is benefitting from much higher electricity tariffs that should enable it to invest in wind, solar and other renewable energy technologies. Gareth Blanckenberg, the energy and power systems research analyst for consultancy Frost & Sullivan, commented: “A rapidly increasing electricity tariff has created an attractive and profitable market for IPPs [independent power producers]. Even in the absence of incentivised procurement programmes, this tariff alone should entice IPPs to enter into the market as they should be able to earn attractive rates of return on their investments.”

The World Bank has already pledged to invest $250m in South African wind and solar power schemes but Pretoria is confident that Eskom and the private sector can contribute the lion’s share of investment. The South African National Energy Research Institute calculates that the South African power sector could support 10-15GW of wind power generating capacity. A spokesperson for the institute said: “Development will depend on whether the grid is able to access specific locations, whether there are industrial facilities nearby and taking into account of  agricultural and environmental considerations.”

Moreover, the SA Wind Atlas, which cost R22m ($2.2m) to develop, concluded that South Africa’s wind potential was similar to that of established wind power producers, such as Germany and Denmark.Renewable energy is also particularly useful for isolated locations that would not justify the construction of larger thermal power plants or transmission infrastructure.  

For instance, wind farms have already been developed on the islands of Santiago, Sal, São Vicente and Santo Antão in Cape Verde, while a 2.5MW project was completed on Boa Vista Island by developer Cabeólica in April. As on other such projects, funding was provided by the European Investment Bank (EIB) and the AfDB.

The first substantial wind power project in the Seychelles was completed in March. The 6MW wind farm, which is located close to Victoria, has been developed by Masdar of the United Arab Emirates. As with most other small island nations, the Seychelles is dependent on small, expensive oil fired power plants.  However, countries across the Caribbean and Pacific are now switching to wind farms and other renewable energy technologies on economic grounds. Importing relatively small volumes of fuel oil pushes up the unit price of the oil significantly.

In most parts of Africa, donor funding rather than private sector investment continues to drive development. Feed-in tariffs, whereby governments guarantee a minimum price for electricity from renewable energy projects, are usually absent.

Zacarias of the UNDP said: “In some situations there are policy vacuums that make it impossible to attract investment – both internally and foreign direct investment. In the case of South Africa, the legislation is coming right but rather late as most innovative companies who pioneered in the renewable energy field have actually given up or burnt their fingers. Some of the surviving pioneering companies have since emigrated to less legislated countries to try to try and set up businesses there.” As ever, the investment environment is crucial.

Rate this article

Author Thumbnail
Written by African Business Magazine

African Business and its award-winning team is widely respected for its editorial excellence. We provide the all important tools enabling you to maintain a critical edge in a continent that is changing the world. Our special reports profile a wide range of sectors and industries including Energy, Oil and Gas, Aviation, Agriculture to name but a few.

Related Posts

Join our mailing list

If you would like Independent, Informative and Invaluable news analysis on the African continent, delivered straight to your inbox, join our mailing list.

Help us deliver better content