1.1 The African Energy Challenge

With 5% of global primary energy use and 15% of the world's population, per capita energy consumption in Africa is only a third of the global average. Nearly half of the current energy use is traditional biomass, a major cause of health problems and deforestation. In 2009, 657 million Africans relied on traditional biomass and 587 million people lacked access to electricity. Limited and unreliable energy access is a major impediment for economic growth. In the coming decades, the energy mix will have to change to modern fuels, the per capita energy use will increase and the population will grow much faster than the global average. Together, these three factors will put tremendous pressure on future African energy supply.

Energy access is an important issue directly related to income and poverty. Access to modern energy rises from virtually zero for the lowest income quintile to 70-90% for the highest income quintile (Monari, 2011). Access can be split into two types; access to electricity for residential and commercial use and access to modern cooking fuels.

Adequate electricity provision is a challenge for industry and policy makers. Between 1990 and 2005, the poor performance of the power infrastructure retarded growth, shaving 0.11% from per capita growth for Africa as a whole and as much as 0.2% for Southern Africa (Foster and Briceno-Garmendia, 2010). In sub-Saharan Africa, 30 out of 48 countries experience daily power outages. These cost more than 5% of GDP in Malawi, Uganda and South Africa, and 1-5% in Senegal, Kenya and Tanzania (Foster and Briceno-Garmendia, 2010). Diesel generators are used to overcome outages and more than 50% of power generation capacity in countries, such as the Democratic Republic of Congo, Equatorial Guinea and Mauritania, and 17% in West Africa is based on diesel fuel. The resulting generation cost can easily run to USD 400 per MWh. Reliable, affordable, low-cost power supply is needed for economic growth. Renewable energy can play an important role in filling this gap.

While electrification programmes have improved access in some countries, many rural populations remain deprived of electricity. The average electrification rate is 30%: 71% in urban areas and 12% in rural areas. In a business-as-usual case, it will rise to 34% in 2020 (Monari, 2011). Average electricity use today is as low as 124 kWh/cap per year and will rise to 235 in 2020 in a business-as-usual case. In comparison, India consumes 640 kWh per capita (2010/11) and the world average is 2,782 kWh per capita (2008).

Some countries have achieved good progress in electricity access. Ghana has raised access from 25% in 1989 to 66% by 2011. Rural access has, over the same period, risen from 5% to 40%. In South Africa, urban electricity access has risen from 30% in 1994 to 83% today, and rural access has risen from 12% to 57%. In Morocco, a combination of grid extension and provision of photovoltaic kits to isolated villages has resulted in the electricity access rate in rural areas rising from less than 15% in 1990 to 97.2% in 2009. However, with high demographic growth, an increasing rate of access to electricity does not mean a reduction of the absolute level of population without access.

Worldwide universal energy access by 2035 will require an investment of USD 36 bn per year, namely USD 33 bn for electricity and USD 3 bn for cooking fuels. About half of those investments would have to be in Africa. Today's investment level is about a fifth of what is needed (IEA, 2010).

Africa spends about USD 10 bn per year on the power sector: USD 2.27 bn for grid extension, USD 4.59 bn for grid supply, USD 1.37 bn for off-grid renewable electricity, USD 1.07 bn for policy/regulation and USD 0.76 bn for efficient use of electricity (Monari, 2011). What would be needed is an investment of USD 40.6 bn per year, consisting of USD 26.6 bn capital expenditure and USD 14.0 bn operation and maintenance. This implies a quadrupling of investments. Annual capacity additions would need to rise to 7 GW per year.

"Limited and unreliable energy access is a major impediment for economic growth. In the coming decades, (Africa's) energy mix will have to change to modern fuels, the per capita energy use will increase and the population will grow much faster than the global average. Together, these three factors will put tremendous pressure on future African energy supply."

UN Photo/Ian Steele © Women collecting fre-wood for cooking pause on the cracked bed of the Niger River.

Successful implementation models for electricity access vary. China is investing USD 700 million in Guinea's rural electricity system. In South Africa, Eskom, the national utility, has been in the lead. In Ghana, a self-help community electrification programme has been used, a model based on the positive experience in Thailand in the 1970s. But it should be noted that all these countries are not least developed countries (LDCs). In the poorest countries, many are not able to afford electricity. This is the core of the problem in Africa. In many cases, governance also poses a challenge, and this is a further brake on rapid expansion of the electricity supply. Renewable electricity can help to overcome these challenges because: (a) many solutions are modular and even applicable on a small village or household scale; (b) decentralised solutions can be implemented in locations without grid access; and (c) in many cases, renewable solutions are economically more attractive.

In the longer run, Northern Africa could even export electricity to Europe. Up to 15% of European electricity demand, which would be equivalent to 15% of African electricity production in 2050, could be supplied from solar and wind plants. Better quality resources in Africa create an economic incentive for such a scheme.

Apart from electricity access, another major challenge is replacement of traditional biomass, which is mainly used as cooking fuel. It can be split into solid biomass (wood and residues) and charcoal. The negative implications of the use of traditional biomass in open fires or charcoal are well covered in the literature. Both fossil and renewable energy technology solutions can be applied.

So far, transportation fuels are of lesser significance. But with car ownership rates rising, biofuels could play a more important role. Moreover, exports of biofuel are being considered.