More than two-thirds of the population of Sub-Saharan Africa has no access to electricity – a figure that rises to more than 85% of those living in rural areas. Those that do enjoy electricity pay some of the highest rates in the world. Now, though, the opportunity for renewable energy investment in Africa is finally being realized. Renewable energy growth in Africa has typically been due to investment in large hydropower plants. The new wave of investment is now happening across the spectrum – including in utility-scale solar PV, wind, geothermal projects (greater than 10 MW in size), and pico solar systems (under 100W) that encompass solar lanterns, task lights, and solar home systems for people who typically earn less than a few dollars per day.
At the utility scale, the leading country in Africa for renewable energy deployment is South Africa, where the government’s integrated resource plan may result in nearly 10 GW of solar PV installed by 2030. With nearly 1.5 GW of solar PV and 2 GW of wind currently installed or in development, following four well-administered auctions, the country is making strong progress.
Kenya, arguably the next leading market, has 750 MW of solar PV and 290 MW of wind approved and in development. South Africa and Kenya have both seen strong economic growth over the past decade and are typically the landing points for new companies looking to expand in the region. The opportunity for large-scale renewable energy investment is now expanding to other African countries through similar mandates for integrating large amounts of renewable energy as part of their overall strategies for increasing electrification rates and meeting demand for power that’s crucial for economic development:
- Rwanda: An 8.5 MW solar PV installation was built by GigaWatt Global Rwanda in Agahozo Shalom Youth Village for $23 million ($2.70/W); in addition, the government has set a 567 MW target for new renewable energy installed capacity by 2017.
- Tanzania: The government of Tanzania has a renewable energy target of 14% by 2015.
- Mauritania: 15 MW of solar PV have been installed, and 15 MW are in development. The government has targeted 40% rural electrification by 2020.
- Ethiopia: A 20 MW module assembly line was completed in partnership with Sky Energy.
- Ghana: The government is targeting 10% renewable energy by 2020.
At the Pico Scale
Of course, there will be challenges along the way in executing these targets and ensuring a fair and transparent process for bidding on projects in these countries. But if the majority of major announcements are realized in the next 6 years, the African solar PV market could see more than 8 GW installed and $23 billion in revenue by 2020.
On the pico solar side, Navigant Research’s report, Solar Photovoltaic Consumer Products, forecasts that the pico solar and solar home system market could surpass 130 MW in annual installations in Africa by 2018, resulting in revenue in the neighborhood of $500 million. Kenya is the leader here, as well, expected to account for approximately 20% of the African market followed by Tanzania. Venture investment is now flowing to so-called social enterprises that use for-profit business models to reach reduce poverty and spread electrification. Pay-as-you-go and mobile phone-based payment systems are expected to be the key to enabling pico solar to scale effectively.
The success of several leading companies – such as D.Light, Barefoot Power, Green Light Planet, M-KOPA, and others – has led to a crowded market in Kenya, in particular, and the need to expand to new markets, including Malawi, Zambia, Rwanda, Uganda, Nigeria, and Zimbabwe, is increasingly on the radar.
Taken together, impressive growth in utility-scale renewables and of pico solar systems in Africa shows that developing countries can forge their own paths, achieving the benefits of electricity without becoming dependent on large, polluting thermal power plants.
Tags: Africa, Distributed energy, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Program
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