How to Power Africa
The obvious and sustainable solution for the energy and welfare of more than 1 billion people in Sub-Saharan Africa - and how to make it happen.
Sustainability is not only about climate change. No Poverty and Zero Hunger are the first of the seventeen global sustainable development goals (SDGs) adopted by the United Nations in 2015, but somehow they seem to be forgotten in the efforts to move the world in a more sustainable direction. The good news is that solving poverty and hunger can go hand-in-hand with efforts to improve the physical and political conditions on the planet.
One fundamental prerequisite for welfare is access to affordable energy. Clean and sustainable energy solutions for the countries of the Global South will not only help lift people out of poverty, but may also contribute significantly to several other issues on the overall sustainability agenda. In effect, we can cover a lot of ground with an integrated approach to meeting energy demands with renewable resources, but our strategy has to be more holistic and we need to step up to the global challenges we are facing.
Sub-Saharan Africa has a population of more than 1 Billion people of which more than 50% live without regular access to electricity (more than 70% in rural areas) — and for the first time in the last decade the number has increased according to the latest IEA report (2022). This, of course, has direct bearing on the ability to meet most of the UN sustainability goals in these countries. Imagine what it is like to perform your daily tasks without normal access to electricity (work, study, cook, etc.).
In many parts of the developed world, the transition to renewable energy (RE) sources is progressing fast. Efforts are concentrated on decarbonising consumption through development of hydro, wind, photovoltaic (PV) and biomass/gas projects combined with electrification of industrial, consumer and transportation processes. The transition also involves new value chains to develop synthetic green fuels for hard-to-abate industries and long distance transportation of goods and passengers.
RE sources (especially hydro, wind and PV) are already commercially competitive with traditional fossil and nuclear resources when used for direct powering of industrial and consumer processes. This has been demonstrated through numerous RE projects that have been sanctioned and developed without subsidies or other non-commercial sources of financial support. The production of green fuels like methanol, ammonia and e-kerosene, through Power-to-X facilities, is maturing fast, but still needs economies of scale to become the obvious commercial and sustainable choice over fossil fuels.
Although the climate change challenge is global, most of the solutions being matured today in the developed countries (including China) are of local or regional character. This makes sense in terms of promoting good solutions, paving the way and acting as role models for other parts of the world but, still, it doesn’t solve the problem.
The Potential of Sub-Saharan Africa
Meanwhile, in Sub-Saharan Africa, many countries are heavily dependent on fossil fuels for their power generation. Ships anchored off the coast are contracted to generate electric power by combustion of Heavy Fuel Oil (HFO), diesel or Liquified Natural Gas (LNG) to provide (limited) power supply for the local grids primarily covering near-shore communities. The amount of fossil fuels used for power generation is increasing with the growing populations of these countries.
The Turkish energy company Karpowership is supplying 8 African nations (and many other countries worldwide) with electrical power from ships burning fossil fuels. In the Gambia, the National Water and Electricity Company (NAWEC) entered a contract for the 30MW Göktay Bey ship in 2018 (replaced by the 36MW Koray Bey in 2020) to produce 60% of the national power supply. The contract was extended for 3 years in April 2022 (including an option for another 5 years). In the same region, the 35MW Metin Bey has been generating 100% of the electricity supply for Guinea Bissau since February 2019 and the vessel is on contract until 2034. The power supplied by these vessels is entirely generated from heavy fuel oil combustion.
The countries of the Sub Saharan part of Africa hold vast potentials for renewable energy production — probably some of the best conditions in the world. In addition, sustainable bio-oil and biochar products from pyrolysis of biogenic waste (e.g. coffee and cocoa pod husks) can be produced. Bio-oil can be used locally to produce heat for drying harvested plant products (e.g. coffee beans) — or cracked in refineries to various commercial fuel types. Bio-char can be stored in the ground as a means of CO2 sequestration (resulting in negative emissions) and, at the same time, provide fertilization for sustainable growth of plantations. Alternatively, the waste products can supply biogenic CO2 for synthesis with green hydrogen to produce green electro-fuels.
The obvious solution is, of course, to support these countries in utilizing their ample RE resources to mitigate the global climate crisis and, at the same time, combat poverty and hunger (and a host of other problems related to lack of stable and sustainable energy supplies).
So, why is it that the enormous potential for RE has not resulted in more development projects in Sub-Saharan Africa? The business opportunities of doing so include:
- Some of the best conditions for PV globally
- Lots of opportunities for onshore wind projects
- Significant geothermal energy potential
- High potential for sustainable bio-oil and biochar products
IRENA, the International Renewable Energy Agency, have estimated that close to two-thirds of new RE capacity installed in Africa in 2020 generated cheaper electricity than the lowest-cost fossil fuel alternative.
The paradox of the seemingly low interest in exploiting the RE potential in Sub-Saharan Africa can only be explained by a lack of risk willingness from international institutions, investors and project developers. Obviously, the ability of the local population to pay for additional power is limited. However, in the Gambia, a ship (owned and operated by the Turkish company Karpowership) located off the coast of the capital Banjul is producing power at costs that resulted in some of the highest electricity prices in the world (around $0.25/kWh) in 2020, indicating a substantial potential to produce RE at lower costs and still making reasonable profits.
China aims to control and dominate crucial mineral and rare earth metal trading and supply chains in Africa. This also means supplying power and infrastructure to support the production, storage and transportation of minerals and metals for electrification and power storage, e.g. lithium, cobalt, and graphite.
According to the World Integrated Trade Solution (WITS), more than 33% of Sub-Saharan Africa minerals were exported to China in 2020.
Russia is another autocratic state seeking influence in Sub Saharan Africa, especially in the Sahel region where Russia increases its footprint to further destabilize this region endowed with vast potential of renewable energy.
Opportunities — and risks
The developing countries in Sub-Saharan Africa are privileged with an abundance of natural resources, including both renewable and sustainable energy resources and some of the most prolific reserves of mineral and metal resources needed for the green transformation.
Development of projects to provide affordable, clean and sustainable energy from PV and wind power to the Sub-Saharan region would not only make sense in terms of substituting the growing demand for energy from fossil fuels to renewables in order to reduce global CO2 emissions. It could also pave the way for additional investments in new business opportunities within production and export of green fuels for international shipping and long-haul air transportation of people and goods.
The transformation of the marine industry, ambitiously headed by Maersk, means that there will be growing demands for green e-fuels like e-methanol in the future. The new green fuels will be produced by electrolysis of water to hydrogen and converted to various e-fuels like e-methanol or e-kerosene using biogenic waste products as feedstock to provide CO2 for the chemical synthesis, e.g. from coffee or cocoa plantations. These hydrogen based e-fuels can serve as propulsion energy for carbon neutral shipping and aircraft transportation (sustainable aviation fuel). Alternatively, the hydrogen can be synthesized with nitrogen (from the air) to produce carbon-free ammonia as a completely CO2 free green fuel for shipping propulsion and/or used as fertilizers for agricultural purposes.
With innovative direct seawater electrolysis, hydrogen may be produced directly from seawater without regional exploitation of scarce fresh water resources and without need for expensive purification processes.
New processing and port facilities in Sub-Saharan Africa might serve as regional supply chains and hubs for green shipping corridors paving the way for the global network required to meet future green fuel bunkering demands around the world.
As mentioned in the beginning of this article, the maturation and deployment of Power-to-X processes to produce green fuels in the Sub-Saharan region of Africa will be expensive and involve significant risks and uncertainties across the various processes and interfaces in the value chain.
In general, development of mega projects like huge wind farms, PV/grid facilities, green fuel refineries, ports and bunker facilities in emerging and volatile markets means exposure to substantial political, regulatory, and market risks in addition to a host of other uncertainties related to local and regional infrastructure and social conditions. However, it should also be recognized that the overall risk exposure in these areas is dramatically reduced by the fact that the production of the vast amounts of RE required for deployment and upscaling of green fuel value chains is located in a region where the natural conditions are some of the best available in the world.
Nevertheless, consistent integration of risks and uncertainties in the maturation process is a necessary prerequisite for succeeding in this type of ground-breaking development project. A coherent decision basis providing insights and good understanding of the risk/reward picture is a must-have. This includes comprehensive, quantitative analysis of the impact of relevant events and variations that may occur during each of the project life-cycle phases, including associated probabilities or frequencies. The integrated valuation model should be successively refined as the project is matured, sanctioned and executed.
It is imperative that investors and other stakeholders have a common understanding of incentives and threats in order to take full responsibility and ensure collaboration across the entire value chain. For this purpose, a common valuation model integrating the significant uncertainties associated with a project of this magnitude and complexity, is an indispensable requirement. This is essential, irrespective of the type of collaboration framework established for the project (i.e. JV, consortium, partnership, alliance, etc.).
The solution — “It’s time for Africa”
Renewable energy resources are plentiful and readily available in Sub-Saharan Africa to supply growing energy demand and help lift hundreds of millions of people out of poverty without the increased greenhouse effect from additional reliance on fossil fuels. In addition, new fuel and power plants, based on RE, may support the growing demand for green fuel hubs strategically located around the world to serve global marine and aviation transportation needs.
For companies and organizations with the right environmental and collaborative mindset, Sub-Saharan Africa holds huge investment and development opportunities as well as the potential to lift a vast number of people out of poverty and save the planet from further release of greenhouse gasses, caused by the growing regional energy demand currently being sourced by fossil fuels. In essence, pursuing these opportunities may not only prove to be a very profitable business, but also addresses at least four important issues on the global sustainability agenda:
On a national level, we may develop good solutions and pave the way for a sustainable future in our home countries, but we can’t solve the global challenges with a narrow focus on our own backyard — we need a holistic and global approach. If the developed countries are not stepping up to their responsibility, the countries of the Sub-Saharan region of Africa, and other less developed regions, may be left in the hands of autocratic regimes aiming for short-sighted profits and geopolitical dominance to secure their own regional influence and growth interests.
At the COP15 in Copenhagen in 2009 developed countries committed to mobilize USD 100 billion per year by 2020 for climate action in developing countries. It’s time to deliver — it’s time for Africa!
