EnergyNet has published a new report exploring the need for captive power producers to find a way to co-exist with the grid. The Chain Effect: Industrial energy policy in Africa in an era of captive power – a case study of Ghana & Kenya report asks how can nations achieve their industry goals if their energy policy do not align?
A number of countries within the sub-Saharan region utilise the blueprint of industrial goals. The idea goes that in order for developing nations to grow their economies they need to manufacture their own goods which will provide cheaper goods for consumers, encourage exports and reduce imports. Ultimately, this will increase employment, income and the overall strength of the economy.
Yet in most instances, there is a disconnect between industry and energy policies to make this possible as energy is not being recognised as the key factor to drive the necessary growth. The report provides valuable insight which suggests that energy planning is the key to success for policy formation.
With Africa’s enthusiasm for renewables and the abundance of clean natural energy, there are big opportunities in the energy market and in doing so reduce the continent’s reliance on hydrocarbons. Captive generation has grown in popularity with a mixture of renewables and non-renewable sources and solar power leading the way. New developing industries can benefit hugely from cheaper energy and technology and for those organisations which use heat production, it is possible to utilise electricity as feedstock.
However, captive generation threatens utility companies as they rely so heavily on power purchase agreements (PPAs) with generation companies, which historically have led to excess capacity and unused power and company deficits. This potentially means energy policies may not encourage and promote growth.
The report’s author, Seth Owusu-Mante Jr: “The ambitious industrial goals by both the Ghanaian and Kenyan governments is instructive. Both governments have a clear understanding of the pathway to grow their economies through industrialisation. This study has however revealed the disconnect between industrial goals and energy plans in both countries, and the impact of high costs and unreliable power supply on the competitiveness of industries to achieve industrial goals.”
“If the next phase of energy planning in both countries prioritises industrial energy access, which has the potential to accelerate industrial development targets, Ghana and Kenya can become icons of industrialisation not only to African countries but to all developing economies”.
The report provides insight into the extent to which industrial policies in sub-Saharan Africa prioritise the energy needs of industries, and highlights unreliability of supply and high tariffs. While policymakers are failing to recognise this, industry is turning towards cheaper and effective technology to fulfil their energy needs.