Navigant Research Blog

Why Africa, and Why Now?

Peter Asmus — December 31, 2015

As I noted in a previous blog on the Paris Climate Summit, it is estimated that over one-fifth of humankind lacks modern energy services. According to the United Nations (UN), 78% of people residing in rural areas are often served by primitive energy systems that spew carbon into the atmosphere.

I would argue that Africa is uniquely positioned to determine the success of the COP21 goals. The proximity of Africa to Europe, which has historically funded a variety of programs for former colonies, is one major reason for the continent’s pivotal role in limiting climate change. Others factors include nomadic populations not concentrated in dense pockets (as is the case in India) that support more centralized infrastructure solutions. For example, even microgrids are a challenging value proposition here for the majority of indigenous peoples in Sub-Saharan Africa. As a result, nanogrids seem to be favored by funders for bottom of the pyramid (BOP) deployments since they are seen as less risky and can reach potential consumers quicker.

A variety of both binding and aspirational goals is expected to affect the remote power supply market opportunity, with activity likely to increase over time for both microgrids and nanogrids. The following sampling of programs and projects are expected to help drive this overall market forward:

  • The UN’s Sustainable Energy for All initiative (SE4ALL), launched in 2011, set goals for ensuring universal access to modern energy services; doubling the share of renewable energy; and doubling the global rate of improvement in energy efficiency in buildings, industry, agriculture, and transport by 2030. More than 70 governments worldwide have been engaged in this effort with over $50 billion pledged to realize these goals.
  • Energy Africa consists of 14 African countries that have pledged to bring solar energy to the 620 million people living in the African continent that currently lack access to electricity.
  • The African Development Bank aims to mobilize $55 billion in private funding under its New Deal for Energy in Africa program designed to eliminate Africa’s energy deficit by 2025.
  • Powering Africa, launched by the U.S. Agency of International Development, has pledged $7 billion to help bring power to Sub-Saharan Africa.

The recent Paris Climate Summit is building on this momentum and accelerating funding. The African Renewable Energy Initiative increased a previous target of 10 GW of renewables by 2020 to 300 GW by 2030. Among the funders of this new venture are The World Bank ($16 billion) and the Green Climate Fund ($100 billion).

This long list of programs implies adequate support for energy access in Africa via cleaner power sources that produce less carbon. Of course, one could turn this assumption on its head. The plethora of programs speaks to the need for subsidies to make such ventures economic. According to a recent report from Navigant Research, the Middle East & Africa region is expected to be the global market leader in remote power. Project implementation revenue is forecast to exceed $4.7 billion in 2015 and increase to more than $11.0 billion by 2024, edging out the Asia Pacific region both at the start and the conclusion of the forecast horizon.

Annual Remote Market Capacity and Revenue by Region, World Markets: 2015-2024

Peter Blog Dec 30


(Source: Navigant Research)

So why Africa? Because it is the most difficult market for energy access. Why now? Because the Paris Climate Summit put a spotlight on Europe’s leadership role in combating carbon, both at home as well as on its neighboring continent.

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