3 December 2012 – The emerging cogeneration market is proving to be an asset in Africa where access to power is limited. However, its worth as an electricity production mechanism for export to the national grid is still undervalued and underutilised, mainly due to a lack of understanding, funding and support from government and financial institutions.
Analysis from Frost&Sullivan finds that there is potential to produce between 1% and 20% of a country’s total electricity demand per annum through cogeneration. This research covers South Africa,Tanzania,Mauritius,Uganda and the Ivory Coast.
Drivers for the cogeneration market include energy shortages, environmental concerns, waste usage and government incentives and rebates. Restraints are often linked to the lack of infrastructure, implementation costs and the absence of government support.
“Growth in sub-Saharan Africa cogeneration is driven primarily by energy shortages,” Frost&Sullivan’s energy and power systems industry analyst Megan Van Den Berg, says. “Companies need to produce their own power to meet electricity demands and most have by-products from processes performed that can be used as fuel or heat.”
Companies in Africa in corporate cogeneration facilities to meet or supplement their electricity and power demands, as there is usually insufficient power available from the local utilities. The cogeneration market, overall, is expected to increase in sub-Saharan Africa over the next 10 years, especially amongst industries that are looking to expand into this region.
However, low electricity tariffs have served as a disincentive to investment into increasing a cogeneration plant’s efficiency to produce excess power for the national grids in sub-Saharan African countries.
“The lower priority given to cogenerated power production, when compared to other renewables, and limited government understanding and support, have resulted in a lack of policies that would provide security of investment and tariffs to justify implementation costs,” Van Den Berg says.
Cogeneration can provide additional and valuable revenue streams to agro-based and wood-based industries, while assisting in meeting the growing power supply gap faced by many African countries.
“Government support and a clearly defined policy on using by-products, such as bagasse, as a substitute to fossil fuel are required. Common protocols and standards regarding cogeneration, together with clear policies offering clarity on investment security, can steer cogeneration towards becoming a substantial long-term green power-generating mechanism.”