THE PLACE OF RENEWABLE ENERGY IN SUB-SAHARAN AFRICA TODAY
OXFORD, 25 JUNE, 2022— With AltDev still in its infancy, this first blog post is intended to serve less as detailed analysis and more as an explication of the ideas that constitute our raison d'être. We hope that the arguments we put forward our nevertheless convincing, if not particularly novel, and look forward to hearing your thoughts.
Power is required for the production and upkeep of every good we consume. Look at any object in a room, on a desk, in your pocket. A mobile phone, for example, requires power for charging, power for manufacturing, and power for the extraction of the raw materials it comprises. Power is essential, therefore, not only for economic growth but for quality of life. It should be a cause for universal concern, then, that power consumption per capita in Tanzania is 0.9% of that in the United States. Indeed, only 39.9% of Tanzania's population have access to electricity at all and only 22% of the population have access to the internet. Africa's people are innovative and talented but their ability to produce change is constrained not only by the institutional problems so frequently acknowledged, but by a debilitating energy gap. Without energy, manufacturing and mineral processing is restricted; the production of one tonne of aluminium from bauxite requires 12-15mWh (megawatt hours) of electricity, restricting many companies to the far less profitable export of ore. The importance of the internet requires little elaboration: needless to say, access must be a priority.
At the same time, Africa stands to lose the most from the developing climate crisis. From 2020 to 2021, 131 extreme-weather disasters associated with climate change were recorded, including dozens of floods, storms, and droughts. On a continent where many people rely on agriculture for their livelihood and hydropower is a significant source of energy, these 'natural' disasters threaten the progress achieved so far and the lives of millions. Angola suffered from severe drought in 2021, meaning that seventy per cent of crops failed and an estimated 3.81 million were without food for months. The development of renewable energy provides a solution for both problems, both facilitating development and counteracting the steady march of climate change. In addition to the necessity of energy as outlined above, if companies invest time and money in training local people they can provide employment both in the construction of power plants and infrastructure and through continued maintenance and operations. Moreover, many methods of renewable power generation produce process heat which has both domestic and commercial applications, whether that be heating homes or chemical solutions.
Unfortunately, implementing a solution is never as easy as coming up with the idea. There are a multitude of barriers to the advance of renewable energy in countries like Tanzania, even when governments are onboard. Companies and other for-profit investors have sector-specific concerns that there is a gap between supply and demand and a commensurate gap between revenues and expenses, and the usual structural concerns rear their heads too: corruption, lack of regulatory clarity, and infrastructural weaknesses. Their worries are justified. Loss-making potential can be huge; on 16th June 2013, electricity prices in Germany went negative and The Economist published an eye-catching article entitled 'How to lose half a trillion euros'. Though the price was only negative for an hour or so and it was without doubt an extremely unusual situation, the example demonstrates the sensitivity of prices to supply and demand. When you consider that few sub-Saharan countries have laws that address geothermal power and extraction, for example, and grids that do not reach most locales or even most households, hesitance is to be expected.
That said, significant progress has been made in recent years and in our conviction that further development is necessary we should be careful not to disparage the work already done. Just this year a project to build the largest ever solar power plant in sub-Saharan Africa was initiated and (if all goes to plan) Angola should have one million more solar panels by 2024. At the end of last year the Tanzania Geothermal Development Company, a subsidiary of state-owned TANESCO, acquired a drilling rig with which to explore the country's extensive geothermal endowment. And just yesterday the Pan-African Renewable Energy Fund (PAREF) was established, putting US$300 million into renewable development across the continent. The upshot is that the groundwork has been laid for a boom in renewable energy in sub-Saharan Africa: the issues inhibiting investment have been highlighted by what has already been done and efforts have been made to remedy them. The IEA estimates that an investment of US$28 billion will be required between now and 2030 to close the energy access gap, with Wood McKenzie suggesting that a further US$350 billion is needed to electrify African economies. With governments actively seeking out the involvement of foreign entrepeneurs - Tanzania's president, Samia Suluhu Hassan, recently talked about embracing the private sector - we stand at the brink of the next phase of African development.