Africa’s green energy developers face uphill battle

In depth
This article is part of the dossier: Africa’s natural gas loophole

By Pierre-Olivier Rouaud
Posted on Tuesday, 25 May 2021 11:35

South Africa Solar Park
Workers install solar panels at a photovoltaic solar park situated on the outskirts of the coastal town of Lamberts Bay, South Africa, Tuesday, March. 29, 2016. (AP Photo/Schalk van Zuydam)

A host of obstacles are preventing oil majors from achieving their renewable energy ambitions, from investment delays to natural hazards to a lack of clear legislation.

This is part 3 of a 4-part series

After their natural gas projects, oil majors are putting the spotlight on their renewable energy ambitions, most of which are focused on the solar and wind power segments. Total plans to invest $60bn in renewables within 10 years and aims to expand its renewable capacity to 100 gigawatts (GW) globally.

That’s the equivalent of 322 of Africa’s largest wind farm, the Lake Turkana power plant in Kenya, which is due to reach full capacity by 2030. For its part, BP is targeting a renewable capacity of 30 GW with the same timeline, while Shell has pledged to devote $2bn to $3bn a year to green energy projects worldwide.

But, for now, majors’ renewable investments in Africa, unlike those in natural gas, remain cosmetic. While Eni has vowed to pursue solar projects in Egypt and Angola, including Solenova, a joint venture with Sonangol, at this stage its completed projects are limited to small solar farms in Tunisia, Algeria and Angola with a combined capacity of less than 40 megawatt peak (MWp).

Shell, by contrast, has led virtually no renewable projects in Africa, just as BP even though it formed a joint venture with the Egyptian infrastructure investor Hassan Allam Utilities in 2018.

Total is slightly more active in the solar realm, with operations through various subsidiaries, including Total Eren and the US company SunPower, which was behind South Africa’s 86-MWp Prieska solar power plant.

After the 10-MWp Soroti solar power plant in Uganda in 2016, Total Eren commissioned a 126-MWp solar park near Aswan, Egypt in mid-2019. In addition, the Total subsidiary recently entered into an agreement with Greentech to build a 35-MWp solar power plant in Angola. Moreover, it developed industrial projects such as the 15-MWp solar power plant at Iamgold’s Essakane gold mine in Burkina Faso.

Shell, by contrast, has led virtually no renewable projects in Africa, just as BP even though it formed a joint venture with the Egyptian infrastructure investor Hassan Allam Utilities in 2018.

“Energy corporations have a global approach to reducing their carbon emissions and are concentrating their energy transition efforts in developed and large emerging countries. Owing to the structure of these economies and their energy mix, the impact is more immediate and massive than in Africa,” says Francis Perrin, a senior fellow at the Rabat-based Policy Center for the New South and head of research at the Institut de Relations Internationales et Stratégiques (IRIS), a French think tank specialising in international and strategic relations.

Playing catch-up

Is big oil dragging its feet on purpose? If Europe’s energy giants are late to the party, it’s for several well-known reasons, including long delays in setting up projects and a lack of interconnectors.

Add to that other problems like the risk cyclones pose to wind power installations in tropical areas, non-existent legislation in many countries and ambiguity in land and customary law; Kenya, for instance, is prone to such issues.

Oil companies accustomed to large-scale projects are ill-equipped to launch a multiplicity of ventures like small projects, microgrids or pay-on-demand solar initiatives akin to M-KOPA’s, despite the fast-growing nature of this segment. “Distributed renewable power generation is one piece of the future of electrification in Africa, but the majors have barely made a dent in this niche,” Stéphane His says.

Playing catch-up, oil companies are looking to establish partnerships. In an alliance with the United States International Development Finance Corporation (DFC), the Shell Foundation has agreed to commit $45m as part of an initiative supporting small electricity producers in Africa.

In 2019, Shell and Sumitomo joined forces to take a 15% stake in the Kenyan microgrid developer PowerGen. For its part, Total created a programme called Total Access to Energy Solutions (TATES) that develops pilot projects in countries such as Uganda and provides financial support to East African start-ups.

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