Renewable energy suppliers are seeking to explore opportunities in Sub-Saharan Africa due to global surplus stocks and services, claims new analysis from a Frost & Sullivan report released today.
The report, ‘Large-Scale Renewable Energy Power Development Opportunities in sub-Saharan Africa’, explains that international renewable energy (RE) power developers are looking to invest in Africa as a result of the continued success of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
Furthermore, reasons attributed to this interest is the acute power supply deficit, abundant resources in the region and the global decline in RE technology costs.
Frost & Sullivan analysis
The analysis from Frost & Sullivan finds that opportunities for the development of grid-connected solar, wind, and geothermal power projects exist in South Africa, Tanzania, Namibia, Kenya, Zambia, Nigeria and Ethiopia.
The Ivory Coast and Ghana, despite not appearing in the top-five, have also been identified as important countries for their large-scale solar photovoltaic (PV) potential.
Solar PV is by far the most popular technology in development, followed by wind, geothermal and concentrated solar power (CSP).
Celine Paton, Frost & Sullivan Energy & Power Systems Industry Analyst, said: “Certain governments across Africa are striving to frame clear regulatory and institutional frameworks in order to rapidly deploy RE power technologies as they have recognised the potential for large-scale RE development.
“Prominent challenges to these efforts, however, include the bankability of the projects, limited grid capacity and the affordability of electricity. Poor long-term planning often compels governments to implement expensive short-term solutions.”
Funding RE projects
According to Frost & Sullivan, the market will require creative funding schemes that will improve the bankability of RE projects.
Development finance institutions, like the International Finance Corporation with its Scaling Solar Programme as well as the Climate Investment Funds’ Scaling Up Renewable Energy in Low Income Countries Programme (SREP), are already moving in this direction.
Paton noted: “Following a global trend, governments in most sub-Saharan Africa countries have established increasingly ambitious RE targets for their power sectors.
“Solar, wind, and geothermal technologies will represent the highest growth, slowly eroding the dominant market share of hydropower, which has recently been prone to severe climate change issues.”
Extent of RE in the region
As of June 2015, the pipeline of large-scale RE power projects in the region (excluding North Africa, South Africa and the African islands) totalled approximately 14.7 gigawatts.
While only 647MW is under construction, there has been significant progress since early 2014 with the commissioning of flagship projects like the Olkaria I-III-IV geothermal projects in Kenya (306MW), the Adama II wind project in Ethiopia (153MW) and the financial close of the Lake Turkana wind project in Kenya (310MW).
The global market trend – in terms of procurement and contracting mechanisms – is currently favouring a competitive bidding process, similar to the one adopted by South Africa’s REIPPP programme.
The renewable energy feed-in tariff (REFiT) approach also continues to be used in emerging markets like Kenya, Uganda, Tanzania, Rwanda, Nigeria and Ghana.
“Overall, strong government support, a long-term vision, astute energy planning and private sector involvement are essential for the successful implementation of RE power projects in sub-Saharan Africa,” observed Paton.
She concluded: “RE power developers that can leverage these factors and garner innovative financing structures will be the ones that optimally tap the opportunities in this dynamic market.”