Georgetown University’s Africa Business Conference was the scene for a fascinating discussion about Africa’s energy transition. The panelists represented a variety of backgrounds including finance, project development, and the public sector.
These are the most important takeaways:
- There was barely any mention of solar or wind energy, and they are expected to account for a relatively small share of Africa’s energy mix. One panelist, an advisor to Ghana’s ministry of finance described Ghana’s conversion from mostly hydro to over 50% thermal, with hydro being most of the rest. Renewable energy, which for his purpose is primarily wind and solar, provides less than 1% of Ghana’s energy, an the 2030 target is only 10%.
- Energy storage is perceived as very expensive, further discouraging the use of solar and wind energy.
- Investors implied what many have long suspected: Several countries, such as Ghana, Kenya Nigeria, Tanzania are perceived as more attractive to investors, largely because of their relative political stability, sensible regulatory regimes, and economic performance. Others are considered significantly more risky. These more risky economies are not only more difficult for investors but have also discouraged organizations who are supposed to help manage risk via insurance and other instruments. The panelists felt these organizations need to be braver and support investment in where they are most needed to change perceptions of risk.
- The bottom line is what is critical for African development is to provide power the the hundreds of millions who do not have it today. That means reliable base load energy, and renewable energy has not demonstrated it is up to the task. Therefore, natural gas and in some cases thermal energy are required. There is a role for renewables in servicing those places the grid cannot reach and to provide distributed energy large customers who want to control their own energy infrastructure and not rely on the main grid.
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