Category: Diversifying our energy mix
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Roughly 600m Africans live without access to electricity. It is a thwarting condition with seemingly no end in sight. Conventional grid and generation infrastructure is prohibitively expensive for Africans and its risk-return profile insufficiently attractive to lure foreign capital. Fortunately, all of this may soon change.
The advent of decentralized energy is triggering a paradigm shift in the way we supply power and Africa is poised to leapfrog the developed world in this arena much like it did in telecommunications.
Independent micro grids combined with clean distributed power, particularly solar photovoltaic, are the solution within reach for powering Africa.
There are at least four arguments in favour of a decentralized energy model for Africa.
First, the fundamental economics of solar photovoltaic are stronger in Africa than Europe or the US. Higher average solar irradiation means more productive systems. Substitutes often don’t exist or are a misfortunate combination of polluting and expensive diesel generators, kerosene lamps and unreliable grids.
Second, this model is prone for rapid dissemination. The reduced scale, complexity and risk of individual projects allows for decisions to be made at a local level instead of by central governments. Arguably, this enables faster uptake, particularly, in remote areas.
Third, this model is highly compatible with governing development policies. Installation and maintenance operations can generate skilled local employment. The manufacturing process of solar systems can be adapted to enable local content. Substituting diesel reduces imports.
Fourth, this model is largely carbon free.
But while decentralized energy offers great promise and likely has the strength to stand on its own feet, there is much that can and should be done by governments and companies in Africa and beyond.
The developed world can mainly help by sustaining the incentives that encouraged the technological, regulatory and business innovations to date. Efforts should now focus on electricity storage given its disruptive potential and complementary relationship with small scale renewable energy, i.e., governments should set storage specific carve-outs in renewable portfolio standards.
African governments should focus on reducing the cost of doing business. Concretely, they should declare decentralized energy a strategic sector and grant it favorable import tariffs, tax rates, permitting processes and flexible labor and local content quotas to attract investment. Pilot programs to test and develop independent clean grids, similar to those currently underway on islands, should be encouraged. Measures to create a more level playing field with diesel (highly subsidized) should be implemented.
It is then up to the private sector to introduce the innovative solutions that overcame adoption barriers in the developed world, e.g., educational marketing, turnkey products and leasing among others. Simultaneously, companies will have to adapt their offering to the local reality learning from pioneers in other industries. For example, they should prioritize reliability as a performance metric and introduce mobile payments.
More than anything, what the continent now needs is success stories an African Tesla or Solar City to champion the cause for clean decentralized energy is the right solution for powering Africa and raising living standards for millions.