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The potential for renewable energy in Africa

2 May 2012 – In Africa, South Africa is investing in wind farms, and along the highways of the Western Cape, one sees a number of solar panels gracing the roofs of government subsidised houses in townships. The national electricity supplier, Eskom, has offered incentive and rebate schemes to households and businesses that invest in solar geysers. In 2011 the World Bank agreed to finance US$250 million wind (in Vredendal on the West Coast) and solar power (Upington, Northern Cape) projects.

Elsewhere in Africa, a number of initiatives have already shown great promise. In east Africa, Kenya is the leader in geothermal generation having built the first geothermal plant on the continent in Naivasha in the Great Rift Valley during the early 1980s. In North Africa, for example, the government of Tunisia has invested heavily in solar energy technologies.

“Africa is generally aware of the importance of renewable energy (RE) as a business case, but has not yet figured out the most viable investment strategy to employ,” Dr Agostinho Zacarias, South African resident co-ordinatior for the United Nations Development Programme says. He is a headline speaker at the African Utility Week conference and exhibition which will be held in Johannesburg from 21st to 24th May.

“There is disillusionment about entry points and required capital outlay, with most governments either under- or over-estimating the related costs. The most prominent constraint is meeting the costs for project start-ups such as feasibility studies, environmental impact assessments and pilot project implementation, most of which should be met by public funding and/or guarantees.

“In some situations there are policy vacuums that make it impossible to attract investment – both internally and foreign direct investment. In the case of South Africa, the legislation is coming right but rather late.”

Incentive structures are often not viable in the long term, making investment in RE less attractive for investors. This can include anything from government subsidised solar heating systems (South Africa) to property tax reductions or waivers where households have made efforts to switch to renewable energy sources as is the case in some states in America.
“In Africa the incentives are normally driven by multilateral funding rather than business viability or national government institutions’ support schemes that are based on the national fiscus,” Zacarias says.

“This tends to complicate the ownership and buy-in as these incentives are drawn upon as long as they are made available. But when the external support mechanism is withdrawn, the project dies.”

Zacarias believes it is imperative for government and industry leaders to attend high-level meetings like CoP17 and African Utility Week. “The more government leaders are exposed to RE and energy efficiency solutions, the higher the likelihood of uptake of similar propositions that may be advanced by technocrats in their own countries.”

The renewable energy track is one of eight tracks at African Utility Week – the biggest conference and exhibition of its kind in Africa. Conference and exhibition attendees can explore information on large power users, metering, transmission and distribution/smart grids, water, infrastructure investment, power generation and waste management.