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The AERC Biannual Plenary - Africa’s Energy Renewal

Introduction

 

The AERC Biannual Research Workshop is among its flagship events and draws its network of researchers, international resource persons, policy makers, private sector and civil society. The Biannual Research Workshop, which is convened twice a year (typically in early June and December) is an enduring delivery mechanism for AERC’s capacity building activities involving “learning by doing” in the conduct of research that informs economic policies in Africa.

The biannual begins with a one-day plenary session on a theme of contemporary policy interest in Africa to expose early career African researchers to best global practices and stimulate new research ideas. In accordance with its Pan African character, the Biannual Research Workshop and the Plenary rotate among African countries. The 46th Plenary Session of the Biannual Research Workshop will be held at the Sandton Convention Centre, Johannesburg, South Africa, on June 4, 2017 on the topic: “Africa’s Energy Renewal”. Thought leaders from around the globe will present commissioned papers during the plenary, and the presentations will be followed by a public-private sector policy roundtable on the same theme.

The plenary session will feature the four presentations below:

  1. Beyond the Grid: Engineering, Institutions and Finance’, by Prof. Laurence Harris, SOAS, UK
  2. To what extent do good Policies and Governance matter in attracting investment in energy in Africa?’ by Amadou Sy, IMF, Washington
  3. Renewable Electricity Generation: Implications of Cost, Returns and Investments to African Economies, by Dr. Helen Osiolo, KIPPRA, Kenya.
  4. Africa’s Energy Renewal: Challenges and Opportunities, by Prof. Kevin Chika Urama, Office of the President, AfDB.

The public-private policy roundtable will emphasize practical experiences, policies, lessons and challenges concerning energy (renewable energy, in particular) in Africa.

 

Why Renewable Energy for Africa

 

Africa’s infrastructure gap is huge, and energy is one of the key infrastructure gaps with a bearing on the inclusivity and sustainability of economic development, as well as quality of life of its citizens. According to the International Energy Agency (IEA, 2014), more than 620 million people in sub-Saharan Africa live without electricity, while about 730 million rely on dangerous, inefficient forms of cooking.

This note presents a few issues for discussion at the 46th AERC Plenary Policy Roundtable that builds on the presentations and seeks to discuss opportunities and challenges to addressing the energy deficit in Africa. Energy is a binding constraint to growth and development, as well as improved living standards. One of the key SDG goals (Goal 7) is commitment “to ensure access to affordable, reliable, sustainable and modern energy”. This is in line with a longstanding recognition that access to affordable and sustainable energy is a foundation for a well-functioning and prosperous economy. Further the SDG goal recognizes the critical role of energy for inclusive and sustainable growth.

Notwithstanding the substantial stocks of fossil fuels (coal, crude oil, etc.), renewably energy (hydroelectric power, wind, solar, other renewables) is getting wider attention across Africa. The region is abundant in terms of renewable energy resources (water, wind, sun, geothermal, etc.); yet faces huge deficit in energy production and efficiency. The quest for increased productivity in economic sectors, including agriculture, industrialization, entrepreneurship, and health systems, should be accompanied by strategies, policies, and capacities for generating reliable, affordable and sustainable energy. In particular then, industrialization in Africa will be dependent on there being adequate, affordable and relatively uninterrupted (consistent) supply of power.

In addressing the ensuing energy gap, particularly renewable energy, numerous considerations come into play. First, climate change has become a major global policy agenda, and African countries have, like any other countries around the world, made significant commitments to reduce CO2 emissions even as they seek to address the challenges of poverty and underdevelopment.  These commitments will have a bearing on the future direction of energy investment and development in the continent. Because of the huge energy deficit in the continent, Africa will suffer less from path dependence (stranded assets) compared to other regions of the world if it shifts strongly towards renewable energy sources. Africa, thus, has the potential and opportunity to lead the world on green growth.

Second, fossil-based electricity generation requires high upfront investment costs. African governments are, however, generally resource starved. Renewables are operable on a small scale (minimum efficient scale is small) – which allows for low upfront investment costs. In addition, operability on a small scale provides opportunity for multiple suppliers to provide energy as compared to the highly integrated monopoly producer/supplier model in most African countries. The ensuing competition allows for efficiencies in the energy market.

Third, Africa is a large continent from a spatial point of view. As a result and in most countries, the population, which remains largely rural, is sparsely distributed. Because of the nature of population density in most African countries, and the low potential usage levels (low consumption volumes) in most rural and secondary towns and cities, the grid system for electricity transmission and distribution may not be cost efficient. Renewables, however, can still be cost efficient, with localized “grids” tailored to consumption patterns. Further, indications are that there has been a steep decline in costs of most renewables technologies (e.g., solar).

The Paris Accord demonstrates the world’s commitment to addressing climate change, with renewables primed as the main source of energy supply in the future. The potential for renewable energy in Africa is enormous, and time is ripe for sound planning and policy design to ensure the right energy mix for sustainable development. Indeed, the use of renewables is growing in Africa, and fostering this growth is vital. It is in light of this that AERC’s plenary session on Africa’s energy renewal is important and timely.

Discussion Issues for the Public-Private Roundtable (but not limited to)

The roundtable seeks to identify the opportunities that can be exploited, and challenges that need to be addressed by African countries toward universal access to affordable and sustainable energy.

  1. Africa faces a huge infrastructure gap in general, and a staggering energy deficit in particular. This is despite the abundant resources for renewable energy (hydroelectric power, wind, solar, other renewables). What are the barriers to accelerated energy renewal of Africa? How do we overcome them? What institutional mechanisms are necessary to facilitate development of renewable energy in Africa?
  2. Energy markets in Africa are generally highly regulated. Is the policy environment in sub-Saharan Africa conducive to private sector investment in energy, especially electricity? In particular, what policies foster genuine reforms of market structure that is conducive to renewable energy, and away from those which are in place to support the current inefficient fossil fuel based systems?
  3. What financing options are available to African countries in the space of renewable          energy? Are there examples of successful PPPs in this space? To what extent has Africa begun benefiting from the global finance institutions such as the Green Climate Fund? What are the challenges and opportunities for Africa in so far as financing of renewables is concerned?
  4. How should Africa transition from the current energy profile (dominated by fossil fuels) to a more sustainable and environmentally friendly energy profile? What are the likely implications for competitiveness of African firms? Put differently, how would you respond to critics who argue that Africa should not forsake her fossil resource endowments, but instead should fully exploit them to accelerate economic development, rather than investing in nascent renewable technologies?
  5. A potential challenge with renewable electricity supply is intermittence. Wind can stop blowing at any time; the sun goes down each day, or the sky could be overcast, affecting the generation of electricity; climate change is increasingly affecting dam levels, and thus hydro electricity generation. How could these risks be managed to ensure a reliable supply of electricity from renewables? Also, how does one safeguard the grid from this intermittency?
  6. There is a momentum building up in Africa for off-grid decentralized renewable energy systems so that millions, particularly those who are in the rural areas, who live outside established grids access clean and sustainable energy? What needs to be in place to accelerate the momentum and what are the barriers to overcome (e.g., financing challenges for decentralized and low scale energy solutions). What are the prospects for regional cooperation and integration of renewable energy systems?

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