Are renewables the answer to Africa's energy deficit?

solar panels in turkanaThanks for the feedback on yesterday’s post – let’s continue this mini-series of posts on energy. A new paper from the energy wonks at the World Bank. ‘The Economics of Renewable Energy Expansion in rural Sub-Saharan Africa‘ asks whether renewables (solar, hydro, wind and so on) are mainly an issue for the rich north, or a potential solution to energy poverty in poor countries.

The authors argue that, whether through carrots or sticks, the pressures on poor countries to decarbonize are likely to grow:  “we are moving into an era when zero- or low-carbon renewable energy will command a market premium based on its ability to reduce global greenhouse gas emissions (GHGs) by replacing fossil fuels. This premium may be realized directly, for example through imposition of carbon taxes on fossil energy sources in developed countries, or indirectly, through payments for “offset” emissions due to substitution of renewable for fossil fuel as implemented in the Clean Development Mechanism (CDM) within the UN’s Kyoto Protocol for GHG control.”

What does the report conclude? 

Short Version: Accelerating development in Sub-Saharan Africa will require massive expansion of access to electricity – currently reaching only about one-third of households. The authors conclude that decentralized renewable energy will likely play an important role in expanding rural energy access. But it will be the lowest cost option for a minority of households in Africa. Decentralized renewables are competitive mostly in remote and rural areas, while grid connected supply dominates denser areas where the majority of households reside (and urbanization is only likely going to increase). They conclude that there is a need to de-carbonize the fuel mix for centralized power generation as it expands in Africa at the same time as promoting renewables in remote areas.

Slightly longer version: “We have tested the conventional view that renewable power remains too costly for large-scale applications in countries where poverty alleviation is the primary objective. Current power grids draw heavily on fossil power sources and are clustered in densely-populated areas, where fixed costs can be amortized over large numbers of consumers. However, the incremental cost of electric service rises rapidly as the grid is extended to settlements whose population falls along a standard rank-size distribution. In contrast, wind and solar power, exploitable in stand-alone units or minigrids, may be broadly distributed across rural areas. Diesel generator power is potentially available anywhere.

Even if a renewable power source has a higher unit production cost than fossil power, it may be cost-competitive in many areas once its local costs are compared with those from extension of the centralized grid.

In the Ethiopian case, we find that decentralized wind power is already cost-competitive with power from an extended central grid in a renewables 2large share of the country’s area. Estimates for Ghana and Kenya—not discussed in the paper but summarized in Appendix 2—show similar patterns. We also find that solar photovoltaic power may become competitive in large parts of the country.

But our scenarios, based on realistic unit costs, also show that for a majority of households, decentralized power supply is unlikely to be cheaper than grid supplies any time soon. Levelized costs for wind energy are very low, but wind potential is limited to a relatively small share of each country. Solar PV would cover less than ten percent of all households under realistic technical change scenarios over the next 20 years. Furthermore, carbon taxes or equivalent premiums for renewable investments are unlikely to make the difference.

Two more general conclusions are warranted: First, stand-alone renewable energy technologies will be the lowest-cost option for a significant minority of households in African countries. These will be mostly in rural and more remote parts of the country.

Second, the economics of grid-supplied electricity in more densely populated areas remain compelling, especially as the concentration of population in Africa is likely to increase rather than diminish (World Bank 2008b). From a climate change perspective, therefore, our analysis highlights the importance of reducing the carbon intensity of grid-supplied energy generation.” [or as Gordon Gecko almost said, ‘grid is good’….]

John Magrath, our in-house renewables watcher, is a bit mystified by this approach:

“Decarbonising the grid is the big issue for rich, developed countries if they are serious about tackling carbon emissions, hence climate change. Providing energy to energy poor people in rural sub-Saharan Africa right now will add barely a jot to carbon emissions. And even decarbonising SSA’s urban grids, while important, is like the parable about advocating removal of a mote from someone else’s eyes whilst being blind to the beam in your own.

You have to feel glad that the Bank is acknowledging renewable energy has a place. However, campaigners would no doubt wearily ask, so why don’t they put more of their money where their mouth now is? The Bank is still fossil-fuel fixated in its loans, as illustrated in new report from Friends of the Earth US – Capitalizing on Climate: The World Bank’s Role in Climate Change & International Climate Finance.

the other energy issue
the other energy issue

And second, this purports to be a paper on Renewable Energy Expansion in Rural Sub-Saharan Africa – so why does it only do half a job? The Bank seems fixated on electricity, as if that is the only form of energy that matters. In rural SSA just as urgent a need is to find energy sources and technologies that will replace biomass and three-stone stoves for cooking, and electricity won’t do that.

It’s also important to think through the different uses of electricity and different ways to provide it. You can distinguish between the small amounts needed for household lighting and how to provide that (e.g. solar lanterns), the larger amounts for schools and clinics (e.g. solar panels/small wind) and the even larger amounts needed to power machinery (for which, frankly, diesel is best). Too many schemes in rural SSA muddle them all up and end up doing nothing very well. (See the new book by Teo Sanchez of Practical Action, The Hidden Energy Crisis, how policies are failing the world’s poor).”

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Comments

12 Responses to “Are renewables the answer to Africa's energy deficit?”
  1. steve jennings

    This comment is on yesterday’s post – what Oxfam should be do about renewables.

    Energy poverty is real, a huge issue, and increasing access to energy (renewable or otherwise) can undoubtedly help improve the lives and livelihoods of people living in poverty. But there are many other huge and complex poverty issues, so the reality is that Oxfam, like any other organisation, has to prioritise its resources.

    Should we/shouldn’t we? The first thing to remember is expanding renewable energy in poor countries will have little impact on global warming – most of the countries and communities where Oxfam works have negligable carbon emissions in the first place. The second point is that almost without exception, the many thousands of NGO projects that have had a renewables component have been just that: projects. Use of renewables hasn’t spread outide the village where a small biogas plant was been installed, fuel efficient stoves were introduced, etc. A big part of the reason for this is that these interventions have lacked a business model that can provide the affordable hardware, maintenance, etc that is needed for products to be used and for them to spread. To put it bluntly, installing a couple of solar panels in a village won’t have any significant impact on energy poverty.

    Looked at this way, the question becomes ‘where can we have a significant impact?’ rather than ‘should we /shouldn’t we?’ For one thing, there are a number of countries where Oxfam works where national and per capita carbon emissions are relatively high (and growing) and thus where de-carbonisation is moving up the political agenda (albeit from a low starting point). South Africa, Brazil, and a few other countries spring to mind. I think that Oxfam could have a significant role in advocacting for renewables in these countries. My suspicion is that this would need two things. Firstly, we will need to form and strengthen alliances and partnerships with local and national organisations that have expertise and legitimacy on energy and on renewables (because frankly, we don’t have much of either). Secondly, we should, in these countries, help provide the evidence that renewables really can do the ‘development’ bit (ie wealth creation and poverty reduction) of ‘low carbon development’ so that politicians can’t hide behind the excuse that renewables endanger wealth creation. That will mean playing a facilitation/brokering role to develop scaleable business models that increase access to energy for people living in poverty.

    To sum up, in medium-emitting countries there is may be opportunities to bring about changes in policy that reduces both energy poverty and carbon emissions. Grasping these opportunities will need partnerships and scaleable business models. Outside of this, the opportunities for making significant changes to poverty or climate change are slim.

  2. Humera Yousaf

    I have recently joined a grass root level organization in rural remote area of Pakistan. We are working for the socio-economic empowerment of women. I think that in case of Pakistan where we are facing energy crisis, alternative green energy resources can be setup effectively. We can start with agriculture, electricity is needed for every field where water is being pumped from the ground. now-a-days, these fields are suffering due to electricity shortage. Poor farmers than use petrol & desel to provide energy for the water pumping. With this small organization, I think we can promote the idea of installing solar panels with every water pump house. it would be cost effective and environment favourable action towards minimizing poverty. So, the idea of renewable energy work for developing countries as well.

  3. John Magrath

    Steve – good thoughts – thanks.

    Humera, maybe solar would work but, have you thought of treadle pumps (operated by foot power)? In India they’ve been extremely successful – IDE (International Development Enterprises India) won an Ashdens Award for their designs and marketing; over 750,000 small farmers have bought these “farmer’s friends” (2009). One great thing is foot power is available exactly when you want it! See http://www.ashdenawards.org/winners/IDEI09#

  4. Friends, let us be realistic, the cost of solar panels, wind turbines, wave, or whatever other green process for generating electricity is well beyond the affordability of most subsistence farmers. Even cities in Africa have the same problem where unemployment is rife. A solar water heating system in South Africa would cost at least R7000.00 (about US$1000). So even in a country such as South Africa affordability is under suspicion. Using solar panels to generate electricity is also very expensive and to make it work needs intricate electronics so that is also suspect, and South Africa as a country has an abundant supply of sun. With our current electricity rates it is still difficult to change from the current supply to something new. We have just installed a 1.5 Gigawatt wind turbine in Coega, the cost was more than $100 million and it will only supply electricity to 20000 households. Nobody has taken into account the maintenance of these wind generators and what expertise one would need to continue using wind generators. South Africa is a developed country with highly skilled people around to ensure the continued operation of these projects, even if they prove to be less than economic to use in the long run.

    Let us now consider what is happening in Africa. A German or America or English, whatever developed country, company will install “green energy” processes, employ their own highly qualified technicians which would have to be paid by the country where they work in a foreign currency. The loan that would be needed to finance the project will also have to be repaid with interest by a country that can hardly afford to have a decent road infrastructure. This is true for each alternative “green energy” process that one can think of. After all this, the people in Africa fall back on the traditional sources of energy, making a wood fire for heat, cooking and surviving. There is an “abundance” of wood which foreign countries also want so we have increasing pressure being put on that source to. Is it surprising that poverty in Africa remains a consideration while the developed world continue polluting the environment and charging Africa with its consequences. Allow Africa its traditional processes while spending more on research and development of more affordable “green energy processes” that can be used here. Force all the real polluters to cut back their contribution by having them fund the search for better alternatives while cutting back on their own contribution to environmental degradation.

  5. John Magrath

    Robert – that’s real realism, and challenging! OK – solar, wind = big problems in sustainability, especially in SSA. But it kind of reinforces my point ( re the World Bank) about the need to look beyond electricity. And in those fields, African technicians can hold their own and they don’t need Northern help. The biggest biogas digesters in the world – designed by a Tanzanian engineer working for the Kigali Institute of Science and Technology. I mentioned yesterday how a group of local blacksmiths in Kisangani, Tanzania, invented probably the most efficient sawdust burning stove yet. So one issue seems to be, how to boost African inventors to do more of their own R&D? and second, which is what we seem to keep coming back to, how to good inventions like these get successfully marketed in environments of a) great poverty and b) poor markets?

    p.s. Re the digesters etc see the Ashdens website again – http://www.ashdenawards.org/winners/kist05 and blacksmiths at http://www.ashdenawards.org/winners/ksg08

  6. Hi, it seems that a lot of the discussion focuses on solar and wind energy. I would be very interested in looking further at hydro-power. Obviously, it would be challenging in arid and semi-arid land where people rely heavily on groundwater.
    Looking at Climate Change Adaptation, and when it comes to water: 1 of the option is to increase water storage capacity. So why not have a small hydro-power plant attached to that storage.
    WWF, WaterAid and Oxfam produced a report “the costs and benefits of hydropower”, which identified the potential of small scale hydro-power. Although it would not be the soluation for all: i believe that we must keep in mind its potential, especially when combined with increasing a community’s water storage for irrigation and health purposes.

  7. The answer to the question “Are renewables the answer to Africa’s energy deficit?” depends on what deficit are we talking about.

    Different groups of people in Africa have different needs and therefore require different answers: If we are talking about energy access for the isolate and poor people, most of their basic needs (household lighting, cooking, heating; energy for health centres, educational centres and communications) can be tapped using small scale renewable energy resources. However, if we want to extend to productive uses where the need for power is a bit larger and the use is not frequent enough, fossil fuels may perform better financially. For example the cost of solar pumping for irrigation purposes is much higher than the cost of diesel (I am sorry Humera but that is the case).

    If we are talking about energy security for the large towns and cities with existing grids, I am sure that there is great potential to green the electricity systems by installing large renewable energy schemes. Renewable energies will not be the cheapest solution for 100% of their existing and expansion needs of energy security and therefore the planners/suppliers/installers will prefer the cheapest solution. In those cases they will claim their right for development and their no obligation to reduce carbon emissions. Perhaps here comes the issue of the inability of the African Countries to use the existing Climate Change Financial Mechanisms (CDM, GEF, etc.). I am sure that a good use of those mechanisms could help African countries to green their economies. So far Africa has only marginally benefited from those mechanisms while the emerging economies, China and India and a couple of other countries have swallowed almost 100% of CDM.

    Regarding Steve’s comments I want to say that it is very difficult to talk about businesses models to sell small decentralised energy systems to the poor, because the poor have no capacity to pay. There are few examples where “tiny solar schemes for lighting” have been successful namely SELCO, Grameen Shakti Bank, and others but these are cases of sales of one product for one need. Other examples are the biogas in Nepal and the Paddle pumps in India as John has already mentioned, but there is still a long way to get to the point where business models can solve the problem. Besides business models there are other, perhaps more fundamental problems; poverty, lack of capacity, governance issues, etc.

    At Practical Action we have been working for more than 30 years trying different technologies and approaches that allow us to reach the poor and to provide energy in a sustainable manner. We have proven many times that, for rural and isolated people small scale renewable energies work well. In most cases it is economically competitive and can be sustainable if the right approaches and technologies are used. The main problem is that governments are used to think grid, the poor have no voice to force government to attend their needs on energy access, and governments are urged by their commercial and productive sectors for energy security.
    Practical Action is advocating for “energy access for all”. We are calling governments to recognise energy needs of the poor, for the international community to increase aid funds for energy access for the poor and for that aid to be spent more effectively.
    Find more about our work at http://www.practicalaction.org.uk/energy-advocacy/energy

  8. Ken Smith

    How to good inventions like these get successfully marketed in environments of a) great poverty and b) poor markets?

    I think there is a big difference in rural or urban environments. There might be poverty in both situations but what makes the market “poor” will be different and so will the solutions

  9. It is me again. Hydro-power is of course an option in countries with large rivers that runs the whole year. To have a sustainable hydro-power scheme requires either a large dam or at least a weir to ensure a consistent flow of water through a power plant. This might well be the answer to central African countries’ energy needs. Consider, however, the cost of such constructions and who will do the job. Again it will be the developed countries’ engineers, technicians, manufacturers of the plant and the cost will again be borne by the African community that can not afford the basics needed for survival. The question that immediately comes to mind is, what happens to arid countries that do not have any rivers that continuously flow to generate electricity. South Africa is one such country, we have two large rivers the Vaal and Orange rivers. During our rainy season, which is not always consistent it might be feasible but during the winter with no rain, or very little, there is not a chance. The dams being built or already built is to provide drinking water to an ever increasing population, projection indicates that we will not have enough water for our population by 2020. Do you now realise why South Africa falls back on coal fired power stations – we have a lot of the stuff.

  10. Marta

    For many poor African counties a centralize power generation system will never happen in our lifetime. The solution has to be local, with systems like RVE.SOL’s Rural Village Energy Hub. Enabling rural communities to generate their own power and stimulate their own local economies seems like a no brainer to me….

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