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Electricity distribution creates investment opportunities for Africa

Africa electrification
More than 620 million people live in Africa without access to electricity according to Frost & Sullivan data

The African continent has seen an increase in renewable energy investment, however power interruptions continue to result in considerable economic losses.

On a global-scale economic losses are in the region of up to $150 billion annually.

In South Africa, due to power generation shortages and maintenance issues, the resulting load-shedding has created vast investment opportunities within the energy space.

It was at the 15th African Utility Week conference held earlier this month in Cape Town where leaders from various sectors across the African continent gathered to discuss and address these current energy challenges and opportunities.

“Over 620 million people in Africa are living without access to electricity; the economic potential to be unlocked is immense,” notes Johan Muller, Programme Manager for Energy & Environment at Frost & Sullivan.

“The African economic environment has seen a steady increase in the financial investment it has attracted over the past decade.

“Discoveries of massive gas reserves on the eastern coast and renewable energy potential, new business models, innovative technologies, a change in the energy mix of countries, and a surge in energy needs due to urbanisation are just some of the key driving forces impacting the energy space.”

Transmission and distribution

During the African Utility Week ‘Transmission & Distribution’ session, it was noted that aging and insufficient transmission and distribution networks severely impede the unlocking of Africa’s economic potential on average.

Cities are increasingly experiencing service delivery pressure due to urbanisation trends – largely driven by higher access to power rates than what is found in rural areas, which in certain countries are as low as 2%.

In sub-Saharan Africa, power transmission and distribution losses are averaging 18%, excluding South Africa, which is witnessing losses below 10%, a figure on par with the global average. Certain countries in West and Central Africa are witnessing devastating losses of more than 25%.

“Gas will be a major game changer,” states Muller. “Recent Frost & Sullivan analysis highlights Nigeria, Mozambique, Tanzania, South Africa, Ghana and Ivory Coast as potential gas hotspots.

Closer to home, the large gas finds in Mozambique of approximately 125 Tcf offer an opportunity to increase gas fired power generation in South Africa. Exploring this gas to power opportunity could lead to a possible solution to our [South Africa’s] load-shedding issues.”

African Utility Week discussions

Other sessions covered at the conference included themes on solar, metering, renewables, investment and more specifically presentations on: “Exploring uses for next generation energy storage”, “Revenue protection: Challenges, opportunities and achievements”, “Cost reduction strategies for utilities, municipalities and cities”, and “Alternative energy: The new energy mix for mining, manufacturing and commercial industries”, among others.

A full industry report covering the above conference streams, as well as additional Frost & Sullivan industry analysis, will be available for purchase next month. ESI Africa will provide more information on this when the report is made available.

The key message at African Utility Week was “Africa is open to business”, which detailed the various opportunities that stand to be unlocked by stakeholders in this sector, whether on the investment, technology or service delivery side.