Energy Technology Policy and the Domestication of Renewable Energy Technologies in Africa"

Citation:
and Stephen Karekezi, John Kimani BBNOKM. Energy Technology Policy and the Domestication of Renewable Energy Technologies in Africa". Nairobi: AFREPREN/FWD; 2009.

Abstract:

It is now widely recognized that the availability of affordable and reliable energy services is key to unlocking the economic growth potential especially in the African sub-region. However, the energy sector remains one of the key challenging areas in Africa, largely lacking in necessary infrastructural investment. The sector is characterized by lack of access to modern energy services (especially in rural areas), poor infrastructure, lack of expertise, low purchasing power, limited investments, lack of local manufacturing capacity and over-dependence on the traditional biomass to meet basic energy needs.

In most parts of Africa, especially Sub-Saharan Africa (SSA), energy has been supplied in insufficient quantity, at a cost, form and quality that has limited its consumption by the majority of Africa’s population, making the continent the lowest per capita consumer averaging about 0.66 toe. Only 25% of SSA’s population has access to electricity and electrification is as low as 5% in some countries while per capita electricity consumption is below 50kWh in parts of the region (World Bank 2007).

The entire generation capacity of the 47 countries of SSA (excluding South Africa) is mere 28 GW (equal to that of Argentina). Capacity utilization and availability is poor, typically in the range of 30% - 40% of the installed capacities. Consequently, supplies are erratic and intermittent, with attendant frequent power cuts, load shedding and at-times outright grid collapses. An increasingly common response to the crisis has been short-term leases for emergency power generation by a handful of global operators. Though this capacity can be put in place within a few weeks, it is expensive. The costs of small-scale diesel units, for example, are typically about US$0.35/kWh. In eastern and western Africa, about one-third of installed capacity is diesel-based generators (IMF, 2008).

Over the past four decades, the gap between energy supply and demand in Africa has actually widened. Unless drastic interventions are made, recent trends indicate that this gap continues to grow, and the majority in Africa will continue to lack access to basic energy services and consequently will have limited chances of realizing any meaningful social and economic development. One form of intervention would be to promote renewable energy development.

The World Bank estimates that about USD 11 billion would be required annually for Africa to achieve 100% electrification by 2030. The IEA estimates that the African power sector infrastructure requires a cumulative investment of USD 485 billion to 2030. Most African countries have largely failed to attract investment in the power sector despite sectoral reforms which attempt to attract private investment. For example, total external capital flows to the power sector in SSA amount to no more than 0.1% of the region’s GDP (IMF, 2008).

Africa continues to face these energy problems despite the fact that the region has significant conventional and renewable energy potential. Renewable energy technologies (RETs) have especially the potential to play a key role in addressing many of the challenges in the energy sector including improving energy security, saving on foreign exchange outflows, availing decentralised energy to remote areas and promoting rural economic >development. Despite these apparent benefits, existing policies and regulatory frameworks have provided little resources to stimulate market growth. Except for hydropower and wind energy, most RETs in Africa are still in transition and therefore demand continuing research, development and demonstration efforts.

There is growing consensus among policy makers that efforts to deploy renewables in Africa have fallen short of expectations; renewables have not attracted the requisite level of investment or policy commitment they deserve. Needless to say, marginal successes have been attained by some countries. Past studies in Africa have identified number of barriers to renewable energy deployment which can generally be summarized into the following:

Lack of a level playing field for renewable energy technologies (due to continued subsidies for conventional technologies; externalities are not internalised in energy/fuel prices and unduly disadvantaging RETs; and poor feed-in tariffs offered for renewable electricity generation discourages investment)

Insufficient incentives for governments and private companies to support renewable energy development

Lack of affordable financing and access to finance for renewable energy technologies (Financial institutions are hesitant to finance RET projects)

Technology standards are lacking for renewable energy technologies

Energy markets are not prepared for renewable energy (difficulties in integration of intermittent energy sources; grid connection and access is not fairly provided)

Renewable energy skills and awareness is insufficient (lack of knowledge and acceptance of RETs; lack of training and education).

In order to overcome the above barriers a number of innovative renewable energy technology programmes have been established. For example, the Cogen for Africa project – an innovative and first-of-its-kind regional initiative was recently launched by the African Development Bank (AfDB) and UNEP/GEF and executed by AFREPREN/FWD. This initiative seeks to significantly scale up the use of efficient cogeneration technology options in seven eastern and southern African countries, namely: Kenya, Uganda, Tanzania, Ethiopia, Malawi, Swaziland and Sudan.

The Cogen for Africa project will build on the success of cogeneration in Mauritius and plans to replicate this technological success in other countries of the region as well as in other key agro-processing sectors found in eastern and southern Africa. The initiative will also take on board relevant elements of the European Commission- supported regional cogeneration programme in south-east Asia, which has been successful in promoting numerous efficient cogeneration installations.

Another notable cogeneration initiative is the Eskom South Africa Cogeneration programme, which was launched in 2007 with a Call for Expression of Interest (EOI) in developing cogeneration. The original target was 900 MW. The call included a standard PPA, and a feed-in tariff to be based on avoided cost of thermal power units. The call received an overwhelming response, with 5000MW worth of EOIs received by end of September 2007 – which is approx. 10% of South Africa’s current installed capacity. A significant portion of the EOIs were from sugar and agro-industries. The South African Government and Eskom were so impressed by the response that a second phase of the cogeneration bids is planned with the aim of mobilizing investment totalling 5000MW [Karekezi, et al, 2007].

The important role to be played by the aforementioned cogeneration initiatives is underscored by the fact that, with regard to renewable energy investment, Africa is doing poorly when compared to other developing countries. However, there is promising large-scale solar development in North Africa and signs of change in South Africa, where targets for renewable energy have been set and the country’s first wind farm commissioned. Development of renewable energy continues to focus on North and South Africa, with the vast mass of SSA largely unexploited. Overall, investment volumes remain very low.

For most of Sub-Saharan Africa, small hydro holds a most near term potential in Africa with several mini-hydro projects in planning stages. There are also many opportunities for medium to largescale biomass-based cogeneration within the agro-industries. With regard to geothermal, Kenya is likely to see some investment in the expansion of its geothermal resources, e.g. the 60 MW Olkaria phase IV project already has secured funding from the Kenyan Government and KfW, but is still at the planning stage (UNEP, 2007).

Based on development plans tabled to date, significant investment in renewables is likely to occur in South Africa from a variety of technologies including cogeneration, wind, tidal, and solar energy. As Africa’s largest economy, South Africa has significant technological and financial capacity to implement large scale RETs development. Furthermore, by having a proactive utility - Eskom - South Africa is poised to become the region’s renewable energy investment hub in the short to medium term.

RETs development in North Africa is mainly centred on Morocco, Tunisia and Egypt, particularly in solar and wind energy. By the end of 2007, Egypt had a cumulative wind installed capacity of 310 MW, while Morocco had 124 MW (El-Khayati, 2008). North Africa is also attracting interest from large-scale solar developers, especially in Tunisia. In Algeria, there are also plans to build a 25 MW parabolic trough solar energy plant as well as a 130 MW combined cycle gas power plant (UNEP 2008).

It is particularly important to deploy technologies that are technologically and economically mature and ensure that local expertise is available to handle the technology. In addition, it makes economic sense to piggyback RETs development on existing industries, institutions and technology developers. A number of demonstration programmes featuring RETs which are not yet mature have failed as outstanding design features hinder the technology’s full deployment. Examples include gasification trials in various African countries. Other technologies are still economically unattractive and still need to several years of learning experience before they are disseminated in large numbers. It is also critical that technology selection takes into account the capabilities of a country in terms of expertise to implement, operate and maintain. Africa has relied for too long on external technical expertise and this is demonstrated by the numerous disused small hydro plants in the region, many of them set up in the pre-independence era.

Investments in RETs need to take into account some key practical aspects which can contribute the effective deployment of the/domestication of renewable energy technologies. Especially important is the need to deploy technologies that are technologically and economically mature, cost competitive, can be operated and maintained by local expertise, and has potential for piggybacking on existing industries, institutions and technology developers.

Specific skills and institutional capacity are required for implementing, operating, modifying, adapting and continuously improving RETs in order to establish national systems of energy technological innovation. Both productive and innovative skills are required to scale-up RETs application in Africa. Many of these skills can be acquired in a technology incubator, which is also useful for commercialization of technologies. Policies that are required to domestic RETs include fostering technology transfer and also build human resource base with specialised skills and expertise. They also include policies that promote and strengthen domestic knowledge base, stimulate learning and innovation and the support structures to sustain these processes.

From projects implemented in various countries in Africa and elsewhere, several factors have been found to be central to the adaptation of RETs. They include educational drive to create awareness and impact, promotion of the utilisation of local raw materials, training of personnel on requisite techniques for equipment operation and maintenance and the emergence of private sector participation. A high political commitment and engaged local NGOs that support such initiatives are also key success factors in the adaptation of the technologies to local conditions.

This report concludes that appropriate energy technological has been recognised as the key driving force in economic development. The acquisition and progressive mastering of technologies has also been a central aspect of Newly Industrialised Countries, mainly in the East, that have grown so rapidly over the last half-century. However, Africa is presently faced with inadequate capacity to independently generate technological knowledge; undertake R&D, and modernize technology used in the industries. Nevertheless, technologies such as renewable energy can be promoted by having specific and targeted technology policies/strategies.These policies can be subdivided into two: Policies for the establishment of an enabling environment; and, Strategies for domestication of RETs.

In order to promote renewables for electricity supply, it is imperative that enabling policies are in place first.The aim of such policies would be to enhance investor confidence as well as ensure that renewable energy projects are sustainable in the long-term.These policies would serve as the foundation on which an energy technology policy would be based on, and they include:

1.Setting of national renewable energy targets

2.Feed-in tariffs for renewables

3.Standard PPAs for renewable energy technologies

Having established an enabling environment for promoting renewables, an energy policy could serve to provide guidelines to investors on various aspects of mature and priority technologies. More importantly, such an energy policy would guide the region towards domestication of renewable energy technologies. The key strategies for the successful domestication of renewables include:

Piggyback on existing industries
Promote mature technology
Capacity building in relevant technical skills
Identify and promote “local champions”

Notes:

Compiled  By Stephen Karekezi, John Kimani, Bothwell Batidzirai, Nicholas Owino and Kennedy Muzee, AFREPREN/FWD, Nairobi

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