The power and energy sector in Africa is imperative to the continents growth and development. The large demand for power, and the lacking supply has led to a need for a greater approach. As the African economy strengthens, the continent becomes a greater investment opportunity, thus making these approaches possible. Furthermore, the continent is fruitful in its natural resources for power, making this all the more possible. Various advancements in the industry are bringing great promise to the African continent.
Here are 5 trends in the energy and power sector that could instill great change in Africa and its people:
Coal projects are becoming increasingly weak as the demand for clean and sustainable energy strengthens. Countries throughout the world are focusing on going green, and thus investing in low-carbon technologies. Coal projects have thus had a market decline globally, making financing for these companies more difficult. Considering the African continents dependence on coal for electricity, this has created a problem for the continent. As such, various countries in Africa have pulled investment from coal plants, turning their focus to renewable energy and low-carbon technology. Furthermore, African countries such as South Africa, Senegal and Morrocco are leading the call to move from coal as a primary feedstock to sources such as gas to fuel power plants. Luckily, connecting renewable energy onto the grid is becoming more affordable as Africa is blessed with abundant natural resources such as great solar irradiation and wind resource. This will indefinitely alter Africa’s power dynamic.
There has been a shift in focus from a feed-in tariff, which is a payment made to households or businesses generating their own electricity through the use of methods that do not contribute to the depletion of natural resources, proportional to the amount of power generated, to an auction tariff. This is critical to the uptake of renewable energy. South Africa is one of the African countries to have introduced this system. The move has worked well for the country and resulted in the cost of tariffs falling, which is beneficial to consumers. The latest grid-connected renewable energy auctions in South Africa have seen prices fall to among the lowest in the world with solar PV prices as low as USc 6.4/kWh and the cheapest wind at USc 4.7/kWh.1Over four bid rounds, between 2012 and 2015, wind energy has fallen by 46% and solar PV by 71% (in nominal, local currency terms) There are similar initiatives in many other markets globally, including in Africa.
The rise of battery storage:
Investment in battery storage is on the rise. This investment relates to the call for sustainable energy. Minerals such as lithium are thus growing in popularity. Demand for lithium has been steadily growing over the years. This is largely a result of energy storage and consumer electronics, such as the manufacturing of lithium-ion batteries for electric vehicles and other power-storage devices. Over the next decade, the worldwide demand for finished lithium is expected to be 400 000 to 500 000 tons per year, a stark rise from the current demand of 160 000 tons per year (as of 2016).What will drive the growth of battery storage further is that the costs will drop substantially in the next three to five years.
Decentralised distributed generation is poised to become an effective solution to Africa’s internet connectivity issues. Through decentralized distributed generation, smaller power stations at specific loading centre’s will be built, rather than bigger, centralized stations that need to transmit power over a long distance. With these smaller centre’s, power is thus supplied to the areas that need it, thus reaching more people who have not had access. Furthermore, this generation can assist in reducing transmission losses, as power would not need to be evacuated over long distances.
There are huge opportunities in the decentralisation of renewable energy and businesses and countries that embrace the shift and invest in the space will yield good returns.
Integrated or linked power grids to evacuate power from one with a surplus to one in need has greatly supported nations such as the USA and European countries. However, at the moment, there is very little integration between African power grids, instead focusing on distinct power pools that rarely interact. There has been a marked growth in investment in transmission projects to link grids across African countries such as Ethiopia, Kenya and Mozambique. These investments act as the beginning of power generation, thus making this investment a necessity. This investment, however, is costly, and thus will be slowly incorporated over the space of a decade across the African continent.
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