Energy projects in Africa remain challenging, but signs of hope emerging
Renewable energy projects in Africa will be significantly affected by the prevailing Covid-19 pandemic, resulting in construction site disruptions, delays and difficulties in getting equipment and components across borders which have different levels of restriction on the movement of people and products, FutureEnergy’s Andy Calitz said during a webinar hosted by EE Business Intelligence on ‘The African Energy Journey: A story of need, abundance, challenge, myths and hope’.
“The main challenge, going forward, is a setback in terms of project development for renewable energy projects, with a number of utilities declaring force majeure during the spread of the Covid-19 pandemic,” said Calitz.
The Covid-19 pandemic is also impacting on sovereign credit, he noted, adding that it is impacting on the recovery programmes of governments as they emerge from lockdowns and try to reopen their economies.
Another major challenge pertaining to African energy projects is the continuing battle for more clarity between the government and private sector in terms of energy supply.
Calitz noted that this leads to the reality that, in general and especially for electricity projects, there is no competition or customer choice of supply, which differs from the situation on almost every other continent.
Further, he pointed out that governments, through regulators, were generally reluctant to “liberalise” power generation licences as an effort to protect the monopoly held by State-owned utilities, especially for projects greater than 1 MW in size.
“This retards the development of renewables in Africa.”
However, at the same time, Calitz said, there was also a general a lack of government and utility capacity to execute its own plans, and in instances where utilities and governments have taken on projects, several issues of political wrongdoing and corruption have overwhelmed projects, leading to inflated energy prices which get passed on to the consumer.
He highlighted that, in Africa, there were several power megaprojects, especially hydro and coal, that have run significantly over schedule and budget. For example, he says Kusile power station has doubled its commissioning schedule, while also doubling its budget, and it is yet to be fully commissioned.
“This leads to major system imbalances which results in blackouts.”
A particular stumbling block for further development of renewable energy in South Africa is the government’s reluctance to “walk away from coal”, said Calitz, noting that Eskom had extended the nameplate lifespan of several old generation coal-fired power stations far beyond their initial expected lifespan.
He also highlighted a few myths about electricity and energy in Africa that he felt needed to be dispelled.
He said there was a common misconception that energy poverty in Africa had an outside-of-Africa cause or solution. However, he said Africa should look within itself to root out problems and develop its own solutions to these problems.
Another myth deals with the perception that governments need to approve every power plant under an integrated resource plan. “One only has to look beyond electricity to see that this is no longer necessary,” said Calitz.
REASONS FOR OPTIMISM
However, he highlighted that there were also very significant reasons for hope in terms of African energy and power development, the most significant being the development of the Mozambican gas industry, which will be followed by the development of the gas industries of Mauritania, Senegal and Tanzania.
“These have high potential to transform the energy sectors of Africa, both domestically and in terms of international participation.”
The South African Renewable Energy Independent Power Producer Procurement Programme is another beacon of hope, enthused Calitz.
“The fact that Eskom has managed to integrate those power plants into the Eskom system and the very big renewables component in the Integrated Resource Plan 2019, if implemented, will serve as an example for other African countries to follow.”