Private Energy Investors Key in Africa’s Energy Expansion

The Continent has deployed 556 MW of grid-connected PV capacity in the first quarter of this year, according to newly released figures from UK-based consultancy African Energy Live Data.

This capacity represents more than half of the total installed power generation in Africa between January and March, which was about 1,097 MW. This is the lowest level of total new installed energy capacity in the continent on a quarterly basis since 2011.

Despite a terrible start of the year, new additions for 2019 are expected to be in line with recent years, as a significant number of large state-owned power plants are scheduled to begin operating, according to the consultancy. In 2018, total new power generation deployment capacity was around 18.7 GW according to African Energy Live Data.

The slowdown shows that momentum gained over the past four years has been difficult to sustain,” the company further explained. “However, there is also some suggestion that the reduction in state-led projects is not being adequately replaced by new private initiatives, leaving open the potential of future supply shortfalls.”

Egypt, which is currently seeing several projects come online from the 1.8 GW Benban solar complex, accounted for 35% of new capacity additions in the first quarter of this year, but this percentage is expected to drop to around 23% by the end of 2019. The region with the largest share in new capacity was the so-called “West, East, and Southern Africa, excluding South Africa,” which supplied 56% of total generation capacity in the first quarter.

Of the total 1.09 GW of grid-tied power added to Africa’s energy supply in the first quarter, around 776 MW was supplied by independent power producers. Another 283 MW came from state-owned entities, and the remaining 64 MW was on lease projects.

Most Additions are by Private Energy Investors

Countries in East Africa have managed to garner 53% in terms of attracting private energy investments since Q1 of the year 2010. This shows a major effort from the part of the government in attracting energy investments.

Tackling the issues of cost of doing business is essential in allowing investors to make those tangible investments thus contributing to energy access. Kenya is a good model in East Africa in the way it has been able to attract huge energy investments that have transformed the entire energy sector.

Figures have actually shown that huge projects, mostly that are bigger than 200MW, have been decreasing since the year 2017. In the year 2019, this figure was about 12%. This means that more efforts need to be put in by governments to ensure that they are able to facilitate an attractive business environment that is convenient for energy investors.

Source: Africa Energy Portal