HomeRegional NewsAfricaAfrica’s energy tales in a post-COVID-19 world

Africa’s energy tales in a post-COVID-19 world

In 2020, the story of Africa’s energy progress took a turn for the worse and without concerted effort, this tale could have a surprising twist where cross-sectorial policies and investment play leading characters.

The article appeared in ESI Africa Issue 1-2021.
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Energy is the lifeblood of society; so much so, that an insufficient and unsustainable energy supply can represent a threat to long term and equitable socio-economic development at both regional and national level. Simultaneously, the energyclimate- development nexus requires a good balance between the exploitation of resources and their use for human activity.

Intermittent generation

The unexpected COVID-19 emergency that has characterised 2020 has contributed to harshen this dichotomy. With the recent experience of whole countries forced under lockdowns, the energy sector has reaffirmed its vital role in supporting healthcare, remote working, distance learning and maintaining virtual-social relationships.

Nonetheless, the health emergency has greatly affected the energy sector along with so many other industries. For the power market, the global primary energy demand dropped by 5%, and the electricity sector is expected to decrease by 2%. Energy investments are expected to be reduced by 18%, thus putting under threat the needed actions towards the clean energy transition (including renewable power generation, resilient infrastructure, and flexibility and quality of national grids), strongly affecting the most vulnerable regions.

Nevertheless, globally speaking, throughout 2020, the energy transition has also demonstrated a certain resilience to the effects of the COVID-19 pandemic. While few countries have chosen to delay decisions related to clean energy transitions, for the majority the addition of other measures has contributed to keeping up the pace towards a clean energy transition.

For instance, many countries have defined climate change or environmental commitments as essential conditions to get access to public support for private companies in the recovery phase (IEA 2020[1]).

Beyond single countries’ commitments, the EU has confirmed its pledge in reaching carbon neutrality by 2050 by launching the European Green Deal[2], an ambitious strategy aimed at fostering the well-being of Europeans by decarbonising the intermediate and end-use sectors, cutting GHG emissions, and offering European energy companies the opportunity to take a leading role in the sector.

At the same time, in the African continent the energy challenges calling for urgent solutions, as constantly remarked on by IEA[3], IRENA[4] and ESMAP[5], have been hampered by the impact of COVID-19, mainly due to three endogenous issues whose influence on the management of the emergency in the continent cannot be entirely negligible.

Firstly, the lack of access to sanitation and public health infrastructure, high household occupancy rates and a significant share of informal jobs that cannot be carried out remotely, make it hard to practise social distancing. In the majority of sub-Saharan African (SSA) countries, close to 60% of health centre facilities do not have a reliable electricity source.

Over 860 million people worldwide lack access to electricity, meaning that the storage of medicines and food is severely limited. While lighting homes, charging phones, and accessing digital information or benefiting from home education remotely prove extremely difficult.

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The second issue concerns the lack of fiscal levers to boost, for developed economies, spending on health measures, provide emergency assistance to workers, households and businesses, and renew their economies. In addition to this, developing economies often face high debt service levels, with many SSA countries spending more on interest repayments than healthcare.

Lastly, remittance flows are expected to fall along with official development assistance and other aids, which will probably be reduced. Simultaneously, the required shift of money towards more urgent priorities associated with the health emergency and the economic recovery may generate a further complexity for the countries in need to improve access to energy and clean cooking.

The economic fallout from the COVID-19 crisis has affected vulnerable people’s incomes as reported in the WEO2020. Approximately 200 million people in SSA are likely to slip into extreme poverty or are at risk of falling into poverty.

In addition to this, many vulnerable households that currently have access to electricity may be unable to pay their bills. More than 16 million people in SSA could lose the ability to afford an essential bundle of electricity services. Countries such as Ethiopia, Nigeria, the Democratic Republic of the Congo or Niger could see between 5% and 10% of their connected population threatened.

Moreover, the economic crisis has harshened the market condition for the energy transition: sales of distributed solar products dropped by around 10% in SSA (staying relatively stable in Kenya and Rwanda, but decreasing in Ethiopia, Nigeria and Uganda). Over 80% of privately owned decentralised energy companies have indicated that after reducing their staff by 30% by cutting jobs, without further financial support they will struggle to survive in 2021.

While there is no single storyline about the future recovery from the COVID-19 pandemic, it seems evident that past progress on energy access in Africa is being reversed. After decreasing for the past six years, the number of people without electricity access is expected to increase, and electricity services, both basic and advanced, could become unaffordable for up to 30 million people who had gained electricity access.

In light of this scenario, there is an urgent need for significant investment levels in the energy sector to sustain and boost employment, enhance economic growth, and improve future sustainability and resilience.

Investment decisions of ‘today’ will impact for decades to come the ways in which energy is produced and consumed on the continent. While sectorial-driven decision exclusively grounded in the current emergency could lead to long-term risks like few incentives to boost the economic sectors with additional risks of job losses, or low investment in sustainable infrastructure. Other risks will surface – such as those associated with emission lock-in stranded assets, thus pushing development and climate objective even farther away in time.

A wide range of cross-sectorial policies is necessary to divert investment, boost employment, enhance economic growth, and improve sustainability and resilience. On one side, investment needs to rely on a strong pipeline of efficient and effective projects. On the other, the right enabling conditions to mobilise private capital needs to be established to support public investment at a national and regional level.

Finally, international co-operation needs to be regarded as a new mutual-learning asset to share a lesson learnt, and this effort will assist in achieving the African aspirations in the Agenda 2063 and the Agenda 2030 global goals.

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About the author
Professor Emanuela Colombo is Rector’s Delegate to Cooperation and Development, Full Professor at the Department of Energy, and Chairholder of the UNESCO Chair in Energy for Sustainable Development at Politecnico di Milano. She is the coordinator of many European Projects in the African continent about sustainable energy and was the academic focal point of the Africa-Europe Energy Partnership and a member of the Sustainable Energy Investment Platform.

References
[1] World Energy Outlook, 2020 – OECD/IEA
[2] A European Green Deal | European Commission (europa.eu)
[3] Africa Energy Outlook 2019 – Analysis – IEA
[4] Scaling up renewable energy deployment in Africa: Impact of IRENA’s engagement
[5] 2019 Annual Report | ESMAP

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