Opening up energy markets to private sector investment through the introduction of smart government policies is key to unlocking Africa’s massive renewable energy potential, according to a new report from the United Nations Environment Programme (UNEP). The UNEP Finance Initiative report entitled ‘Financing Renewable Energy in Developing Countries: Drivers and Barriers for Private Finance in sub-Saharan Africa’, outlines how to tackle current obstacles to the scaling-up of sustainable energy solutions in Africa, such as the cost of electricity generation or difficult grid access.
The report is based on a survey of 38 institutions, mostly from the private sector, which are all involved in energy infrastructure finance in developing countries. The report was aptly released at UNEP headquarters in Nairobi, Kenya, to mark the Africa launch of the United Nations 2012 International Year of Sustainable Energy for All.
Africa’s growing energy needs: scaling up sustainable energy
To meet Africa’s growing energy demands, the power sector in Africa needs to install an estimated 7,000 megawatts (MW) of new generation capacity each year. The UNEP report argues that much of this can come from Africa’s wealth of untapped, domestic renewable resources.
Cape Verde, Kenya, Madagascar, Sudan and Chad have particularly significant potential, says the study. According to the African Development Bank Group, Mauritania’s wind energy potential is almost four times its annual energy need, while Sudan’s is equivalent to 90 per cent of its annual energy needs. This offers both opportunities to improve energy security and create regional markets.
“Accelerating and scaling-up sustainable energy for all will be key to realizing a transition to a low carbon, resource efficient ‘inclusive’ Green Economy”, said UN Under-Secretary-General and UNEP Executive Director Achim Steiner.
“Some 1.3 billion people worldwide have no access to electricity – and 45 per cent of those live in Africa. Yet the Continent has abundant renewable resources that, with the right kind of public policies in place, can unlock a new development future and light up the lives and the livelihoods of millions of people,” he said.
Africa’s opportunity to enhance national energy security
The study shows how policy incentives can help reduce the higher costs associated with electricity generation from renewables and improve the competitiveness of investments in the sector, versus traditional energy sources.
It also gives examples of how such incentives at national and international levels are already making a positive impact in Africa. An example is, a government feed-in tariff in Kenya that was introduced in 2008 to expand renewable energy power generation in the country, which will incentivize an estimated additional energy generation capacity of 1300 Megawatts (MW) – more than double Kenya’s present capacity. The increased investment in renewables is also expected to trigger significant job creation through construction of power plants, grid connection and maintenance.
UNEP’s Green Economy Report shows how the cost of renewable energy services would be even more competitive if the negative, indirect impacts associated with fossil fuel technologies were taken into account.
Some African countries, including Kenya and Senegal, are currently devoting more than half of their export earnings to energy imports. UNEP’s Green Economy Report indicates that scaling-up renewable resources that are available domestically, could enhance national energy security, while mitigating the public health risks caused by the mining, production and combustion of fossil fuels.
Source: UNEP press release ‘Smart Public Policies Key to Powering Up Africa’s Clean Energy Potential’