A recent International Energy Agency (IEA) report has warned that budgets of nations and development finances will not be sufficient to fund the investments required to meet Africa’s growing power demands to 2040.
Titled ‘Africa Energy Outlook 2019’, the report states that cumulative investments of $2.6-trillion, or 2.4 percent of gross domestic product (GDP), will be needed between 2019 and 2040 to meet growing demand and improve access to modern energy services.
IEA calculates that a quadruple increase in power sector investment will be required to meet the target, which would translate into yearly investments of $120 billion into mostly low-carbon generation technologies and transmission networks.
Such investment levels represent a material scale-up relative to the continent’s current investment trajectory, which implies cumulative investments of $1.4 trillion over the period, or only 1.6 percent of GDP.
Under such a trajectory, 530 million people on the continent will remain without access to electricity in 2030, falling well short of the universal-access development goal.
To improve energy access in a continent that will house 2 billion people by 2040 making it larger by that date than either India or China when private capital will have to be catalysed, as has been done in several countries in Asia in recent years.
Today, 600-million people in Africa do not have access to electricity and 900 million lack access to clean cooking facilities.
According to the IEA report, “Mobilising private capital requires concerted efforts from both African governments and international development finance institutions (DFIs)” .
It notes that 16 out of 43 sub-Saharan African (SSA) countries still do not allow private participation in both generation and electricity networks. This despite that fact that 19 out of 39 utilities in Sub-Sahara Africa are not able to recover enough cash to cover operational expenses.
Between 2013 and the first half of 2018, power sector investments based on private participation in infrastructure models in SSA amounted to about $4.5-billion a year.
The IEA acknowledges that mobilising the levels of investment outlined in its report will be a significant undertaking, but also insists that it is achievable if concerted efforts are made by African governments and the global community.
“Drawing on rich natural resources and advances in technology, the continent could by 2040 meet the energy demands of an economy four times larger than today’s with only 50% more energy,” the report concludes.
With the right policies, the IEA argued, Africa could achieve universal access, while also becoming the first continent to develop its economy mainly through the use of modern, low-carbon energy sources.
IEA argues that solar photovoltaic technology could become the continent’s largest electricity source in terms of installed capacity by 2040, while the continents vast resources of natural gas, could drive industrial growth and provide the flexible generation capacity that complements renewables.
MIKE OCHONMA
