• Spoiled for choice

    As Africa continues to tackle its energy challenges, a range of power projects are providing options for investors.

    Spoiled for choice

    Wind, water, sunshine… Between its coastline, savannahs, deserts and great lakes, Africa has all three – and plenty of them. Yet, when it comes to converting that wind, water and sunshine into energy, there’s a technical gap that the continent cannot seem to bridge. Speaking at the launch of the West Africa Clean Energy Corridor (WACEC) at African Utility Week in Cape Town in May, Jansénio Delgado painted a stark picture of exactly how wide that gap still is.

    Delgado, a renewable energy expert at the Ecowas Centre for Renewable Energy and Energy Efficiency, told delegates that at least 52% of the West African population did not have access to electricity. However, he also said: ‘The region has big potential in terms of renewable energy from hydro, solar, wind and biomass. These resources are geographically distributed, which makes them complementary.’

    According to Delgado, the preliminary conclusions of renewable energy studies showed that the development of 10 GW of electricity could still be added to the region’s grid by 2030. ‘So the utilities and electrical companies should adapt to renewable energy as a next phase of electricity generation,’ he said.

    Of course, the discussion about Africa’s potential for renewable energy – and solar power especially – is nothing new. As the WACEC was being launched, Botswana’s state-owned power utility was calling for bids to build a 100 MW solar-power plant to boost the country’s energy security. And during the course of African Utility Week, ICT firm Huawei ran its own event, the Huawei Power Summit, during which it explored the possibilities around smart-grid solutions.

    Solar power also dominated the 2017 edition of the Access Co-Development Facility (ACF) competition, with just under half of the entries and three of the five shortlisted projects falling in the solar category. ACF is an innovative funding and support platform for renewable energy projects in Africa, and the competition is presented by Access Power and EREN Renewable Energy. Last year, Access Power commissioned East Africa’s largest solar power plant in Soroti, Uganda, providing clean energy to more than 40 000 homes, schools and small businesses.

    One of the three competition winners was also a solar project: Tanzania’s 30 MW Kondoa solar PV project. The others were Rwanda’s 9.7 MW Rukarara hydro project and Ghana’s 48 MW Winneba wind project. When completed, the three projects will collectively provide around 85 MW of electricity – enough to power more than 420 000 homes and SMEs. The winning projects, which will share the US$7 million pot as well as technical support and expertise, will now enter into joint development agreements with Access Power, which will take an equity stake.

    The judging panel based its final selection on the commercial, technical and environmental merits of the projects, as well as the local regulatory environment and capability of the project teams. Of the 23 countries represented in the most recent edition, 18 have electrification rates below 30%. This year’s application process also further highlighted the rise of East and West Africa as hotspots for renewable energy development, with nearly 80% of all applicants hailing from both sides of the continent.

    Hydropower is one of the renewable energy sources most susceptible to adverse weather. Media reports in Uganda, for example, showed that, over the four months leading up to April 2017, Uganda saw a 300% increase in power exports to Kenya, as drought cut Kenya’s local generation of hydroelectric power by 347 million kWh.

    However, hydropower remains the largest global source of affordable renewable energy, according to Tusekile Kibonde, resident underwriter at African Trade Insurance Agency. In a piece published by ESI Africa, Kibonde wrote that hydropower ‘is not susceptible to oil price shocks that have created hardships in so many developing countries in the last five years’, pointing out that ‘in Africa, hydropower is an under-exploited asset with seven major rivers – the Nile, Niger, Congo, Senegal, Orange, Limpopo and Zambezi’.

    Kibonde argued that, ‘as an important energy source, hydro capacity can be harnessed more effectively with a focus on smaller-scale hydropower projects that will be easier to realise than large-scale mega projects’.

    Investors such as General Electric (GE) have pledged their involvement in Africa’s hydropower revolution. In a recent report published by GE Africa, Yves Rannou, president and CEO of hydro at GE Renewable Energy, said that the company has already installed 18 GW of hydropower on the continent.

     

    ‘Hydro is booming in Africa,’ Rannou wrote. ‘In 2016, more than 3 GW of hydropower capacity was put into operation, with plans to grow its installed base in the years to come. There are also plans for an additional 7 GW in Angola; 2 GW in Mozambique and Nigeria; 2 GW in Morocco; and 18 GW in Ethiopia by 2030.’

    GE Renewable Energy recently created its Renewable Energy Services Business – which includes a digital team – to work with its hydropower as well as onshore and offshore wind businesses.

    ‘The future for software is extremely bright in hydropower,’ Rannou wrote. ‘Having more data helps to make better asset decisions for reduced costs, better efficiency and overall life-cycle performance. That’s why we have introduced the Digital Hydro Plant, a unique blend of hydropower software and hardware, based on data analytics, to improve the performance of the hydro plant of our customers, create actionable insights from their data and increase profits.’

    While Central Africa – blessed as it is with its lakes – is focusing its investment energies on hydropower, West and Southern Africa are looking at other alternatives. In Nigeria, GE CEO Lazarus Angbazo recently outlined GE’s plans to launch a gas-turbine assembly plant, with the company investing more than US$100 million in gas-fired power plants. Meanwhile, in South Africa, Minister of Energy Mmamoloko Kubayi opened May’s Gas to Power Conference in Cape Town by declaring her support for the country’s proposed 3 700 MW gas-to-power programme.

    ‘Natural gas is capable of providing more than just electrical power,’ Kubayi said. ‘In our assessment, it can also provide direct heat and chemical feedstock for industrial processes, commercial and residential cooking and heating applications as well as an alternative fuel source for transportation purposes. Depending on the economics, water desalination capability from natural gas-to-power projects at coastal locations is also possible.’ South Africa’s move towards gas-fired energy is piquing the interest of several global investors. A consortium led by Italy’s Ansaldo Energia with Danieli Group’s Fata recently completed construction of Avon – a second, US$548 million open-cycle gas-turbine power plant near Durban. This, together with the Dedisa peaking power project, which entered full commercial service in 2015, will supply power to power utility Eskom under a 15-year purchase agreement.

    Power at the Dedisa and Avon plants is generated respectively by two and four Ansaldo Energia gas turbines using fuel oil. Both plants are prepared for future conversion to combined cycle and natural gas.

    ‘Gas can be a complete game changer for the South African economy,’ Siemens South Africa CEO Sabine Dall’Omo recently told Bloomberg News. ‘International investors are very interested in South Africa when it comes to developing the gas industry.’

    Dall’Omo added that the gas industry ‘is very labour-intensive’, and could create add as many as 250 000 job opportunities – figures that will surely interest government as well as corporate investors.

    By Mark van Dijk
    Images: Gallo/Getty Images