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Reliable electricity needs fourfold increase in investment: IEA

By David Whitehouse
Posted on Tuesday, 12 November 2019 08:05

Household air pollution from biomass-based cooking is causing 500,000 premature African deaths a year. REUTERS/Rogan Ward

Africa has the potential to follow a much less carbon-intensive development model than many other parts of the world, the International Energy Agency (IEA) says in its Africa Energy Outlook 2019 presented at the Africa Investment Forum in Johannesburg.

A key task for policy makers to address the persistent lack of access to electricity and clean cooking, the report finds.

  • Nearly half of all Africans did not have access to electricity in 2018, while around 80% of sub-Saharan African companies suffered frequent electricity disruptions.
  • Over 70% of the population, around 900 million people, lack access to clean cooking.

Dirty fuels dominate the cooking market in Africa’s 40 largest cities, according to Greg Murray, CEO of Koko Networks, which operates in Kenya.

The cost of fuel for cooking alone, Murray says, can account for between 10% and 20% of African household incomes.

  • Household air pollution from existing forms of cooking is causing 500,000 premature deaths a year in Africa, the IEA says.
  • Biomass in cooking also contributes to forest depletion through unsustainable harvesting of fuelwood, which is also a drain on labour power mostly borne by women.
  • If solid biomass remains a mainstay of cooking, premature deaths from inhaling the fumes could end up only 2% below today’s level by 2040.

The key issue in reducing reliance on biomass in cooking is the affordability of alternatives, says Kieran McNamara, one of the IEA report authors.

  • In the Democratic Republic of the Congo (DRC), where 62% of cooking relies on biomass, greater effort is needed to encourage the use of more efficient cooking stoves in rural areas, he says.

Need for investment

Though it has 17% of the world’s population, Africa currently accounts for just 4% of global power supply investment. “The momentum behind today’s policy and investment plans is not yet enough to meet the energy needs of Africa’s population in full,” the report says.

  • Achieving reliable electricity supply for all would require an almost fourfold increase in investment, to around $120 billion a year through 2040.

Governments need to make more efficient use of public funds to attract private investment, McNamara says.

  • In sub-Saharan Africa (SSA) excluding South Africa, each dollar of public sector investment attracts only around 60 cents from the private sector.
  • In South-east Asia, by contrast, the ratio is close to 1:1. McNamara attributes the difference to better regulatory regimes and more stable governance.

African countries such as Ethiopia, Senegal, Ghana and Côte d’Ivoire have made significant progress in scaling up and attracting investment, he says. In the DRC, by contrast, the power sector remains “tiny,” though there are some successful standalone systems, McNamara says. “It can be done.”

McNamara stresses that there are no generic African solutions or roadmaps.

But there are “generic problems such as scale, lack of access and climate impact.” Some countries are addressing them better than others, he says.

Urgency on natural gas

Natural gas in sub-Saharan Africa (SSA) has so far been a “niche fuel”, the report says. The share of gas in the energy mix in SSA is around 5%, among the lowest in the world.

Major discoveries in recent years in Mozambique, Tanzania, Egypt, Senegal and Mauritania and South Africa collectively accounted for over 40% of global gas discoveries between 2011 and 2018.

  • Much will depend on the price at which natural gas becomes available, the development of distribution networks, the financing for infrastructure and the strength of policy efforts to displace polluting fuels, the IEA says.
  • According to Palzor Shenga, senior analyst at Rystad Energy in Norway, there is currently 100mn tonnes of LNG in the global pipeline waiting to be sanctioned. He argues that there is therefore a risk that by the 2030s, the global market will be over-supplied, with competition led by the US.

If African countries are to find a market for their gas, they first need to develop a regulatory framework that serves domestic development priorities while remaining attractive for foreign investors, McNamara says.

In the case of east Africa, proximity to India and other fast-growing Asian markets is clearly an advantage, he argues.

  • The IEA’s analysis shows that the delivered costs of gas to Asia for these projects are estimated to be broadly similar to those of projects in other emerging gas exporters such as Canada and Australia.
  • “Strict control of costs and schedules is therefore very important,” McNamara  says.
  • “Any cost overruns, which often stem from above-ground issues such as unfavourable security conditions, could significantly undermine the competitiveness of the projects.”

Bottom Line: African countries have the resources for a cleaner and safer energy mix. For many of its peoples, there is only a limited window of opportunity to use them.

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