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The Transition to Renewables in Africa – Why is it an Urgent Need?

The Transition to Renewables in Africa – Why is it an Urgent Need?

  • Alexander Ayertey Odonkor • Economic consultant, financial analyst and economist

The continent’s population is growing faster than any other region, making it increasingly difficult for governments and energy companies to meet the continent’s energy demand. A report (2019) by the Population Division of the United Nations Department of Economic and Social Affairs suggests that of the two billion people that could be added to the world’s total population between 2019 and 2050, Sub-Saharan Africa (SSA) will account for 1.05 billion, representing 52%.

Although population growth in North Africa is comparatively slower than in sub-Saharan Africa, the region is projected to add 237 million people between 2019 and 2050 and a further 170 million people between 2050 and 2100.

 The high rate of population growth in Africa is exacerbating the challenges associated with energy supply, as installed power generation capacity in the region does not meet current energy demand. An article (2020) published by Finance and Development (F&D), the International Monetary Fund’s (IMF) flagship journal, indicates that almost 50% of the region’s population does not have access to electricity. The economic loss attributed to energy shortages in Africa every year is about 2% to 4% of gross domestic product (GDP).

 In most African countries, the revenues generated by energy companies do not cover the total cost of energy produced, preventing the provision of sufficient, reliable and affordable energy. People who have access to electricity in Africa pay an average of about twice as much as consumers in other parts of the world. With demand on the continent expected to grow by 3% per year, it will be impossible to achieve sustainable development with Africa’s current energy mix.

Currently, the region’s energy mix is largely derived from oil, coal burning and traditional biomass (charcoal, dry dung fuel and wood). These energy sources may be cheap but they are not the most appropriate energy mix, especially for a continent that is the most vulnerable to climate change.

 According to the African Development Bank (AfDB), although Africa accounts for the lowest greenhouse gas emissions, seven of the 10 countries most vulnerable to climate change are in the region. This is due to the region’s considerable dependence on agriculture, which plays a vital role, serving as the backbone of many African economies, especially in sub-Saharan Africa.

Africa needs support from countries that have resources to increase the region’s transition to renewable energy

Rain-fed agriculture accounts for over 95% of agricultural land in SSA. This and many other climate-sensitive economic activities, such as fishing and grazing, place these countries in jeopardy, as the impact of climate change will derail progress made against poverty, increase income loss and accelerate food insecurity.

Workers install solar panels on the roof of a residential property in Johannesburg, South Africa, 13 March 2020. To meet Africa’s growing demand for energy without causing serious consequences for development, the natural environment and human health, the region is promoting renewable energy.

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The implementation of a well-designed energy mix that is dominated by renewable sources will not only limit greenhouse gas emissions but also have the capacity to stimulate growth, create new jobs and facilitate sustainable development. Obviously, Africa cannot achieve this feat alone. The continent needs the support of countries that have the resources to increase the region’s transition to renewable energy. Among the many countries supporting Africa in this regard, China’s contribution represents the largest share.

A report by the International Energy Agency (IEA), which examines China’s recent and planned contribution to sub-Saharan Africa’s energy sector from 2010 to 2020, suggests that during this period, Chinese contractors have built 10% of SSA’s installed capacity, equivalent to Finland’s total installed capacity. Renewable energy sources account for 56% of the total capacity added by Chinese projects during this period, with hydropower accounting for 49%.

China’s contribution to technology and capacity development in the African energy sector is encouraging. Between 2010 and 2015, buyer or seller credits, foreign direct investment and loans for the development of the region’s energy sector reached US$13 billion, accounting for one-fifth of total investments in the region’s energy sector.

However, countries across the continent are struggling with the economic downturn caused by the pandemic and this could undermine the region’s substantial progress in reducing energy poverty. This is the time for development organisations and relevant stakeholders to provide unwavering support to African countries in an effort to sustain growth in the sector.

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