Power out of Africa
Dec. 6, 2011 - ANDREA CHIPMAN - online.wsj.com
On the face of it, the idea of Africa providing
a model of sustainable energy development to the
world seems an unlikely one. Eighty percent of the
world's 1.5 billion people living without electricity
live in Sub-Saharan Africa, according to the African
Development Bank. The continent's scarcity of grid
links would seem to be an intractable obstacle to
Africa's goals of improving development and alleviating
poverty. Yet, Africa possesses significant solar,
wind, geothermal and hydropower resources that have
only barely been tapped, and which give the continent
the potential to offer different models of sustainability
African countries have a huge opportunity to turn
their energy infrastructure deficits into an advantage,
both for the continent itself and potentially for
the rest of the world. Renewable technologies that
use wind and solar are the gateway to this opportunity,
but much work still needs to be done. Africa is in
many ways a blank canvas for renewables.
The lack of comprehensive grid connections means
most Africans currently get their power from diesel
generators at prices of around $1 per kilowatt-hour,
compared with less than 20 cents per kwh for solar
photovoltaic power, according to David Nickols, managing
director of WSP Future Energy, a unit of London-based
technical consultancy WSP Group.
"Because renewables [in Africa] are compared
against decentralized diesel generators off-grid,
the financials for renewables may well look attractive," he
At the same time, the huge potential offered by
larger-scale projects will require new cross-border
collaboration between African governments, multilateral
institutions and industry that could, if successful,
be a model for other regions of the world.
To be sure, both large and small renewable projects
face many of the same obstacles in Africa: A lack
of secure property rights; the absence of a comprehensive
regulatory framework in most African countries; and
pressure on governments to make their electricity
self-sustaining, with prices charged matching the
costs of generation. "The best thing the world
could do for Africa is to set up a support system
for the utilities," says Jeremy Connick, a partner
with U.K. law firm Clifford Chance.
"If we simply say we aren't going to allow
governments to give guarantees in respect of the
payment obligations of these utilities until systems
are reformed, countries don't develop, or use fossil-fuel-powered
Meanwhile, markets continue to discount the risks
associated with fossil fuels, assuming they are lower
than those associated with alternative energy.
"In terms of pure political and economic power,
conditions still favor investment in fossil-fuel-based
technologies and businesses," says James Cameron,
a founder and vice chairman of Climate Change Capital
Improved legal and tariff structures could dramatically
improve the climate for sustainable energy investments,
but a focus on micro as well as macro projects is
The Wall Street Journal Europe has investigated
five approaches to sustainable energy in Africa,
ranging from wind and solar energy programs, to hydropower.
As well as a proposal to allow individual citizens
to profit from their own sustainable behavior.
Wind is in plentiful supply across Africa, with significant
projects under development from Kenya to Cape Verde
from Morocco, a former leader in wind projects,
to South Africa, which earlier this summer rolled
out a tender for renewable power projects that included
up to 1.85 gigawatts of installed wind generation
set to be delivered by 2030.
In East Africa, Kenya is developing the Lake Turkana
wind farm, which is expected to produce 300 megawatts
of new capacity by July 2012. Similarly, off the
continent's windy west coast, Cape Verde's government
has signed agreements for a more modest 28 megawatt
wind farm, although the more consistent wind conditions
on the island chain means the ratio of actual to
potential output is 60% for the Cape Verde wind farms,
compared with 34% in the U.K., according to Mr. Connick.
Wind energy has the advantage of being an effective
source of power in small and large projects. For
the medium-term, however, financial considerations
could make it a second choice alternative energy
source, according to Mr. Nickols, who notes that
with Africa needing to import most goods for power
generation, the towers for supporting wind turbines
work out as substantially more expensive than solar
panels, which are cheaper and easier to ship.
Virtually uninterrupted sunshine is one commodity
Africa has in abundance. Now, a number of projects
based in the Sahara Desert are trying to use this
resource to the continent's advantage.
The biggest of these, the €400 billion ($550
billion) 12-member German-led Desertec Industrial
Initiative consortium, is looking to fund a series
of individual solar projects with the aim of supplying
as much as 17% of Europe's energy demand by 2050.
German Chancellor Angela Merkel [above] is lending
her support to a German-led project that aims to
use the deserts of North Africa to provide electricity
The project has strong backing from leaders across
Europe, with German Chancellor Angela Merkel leading
the charge. In a message to the second Desertec conference
in Cairo in November, Ms. Merkel praised the cooperation
between Europe and North Africa and stressed the
importance of diversifying energy transmission away
from traditional sources.
Desertec works by concentrating energy from solar-thermal
power plants in deserts and then using heat storage
tanks to deliver power on demand, thereby compensating
for the fluctuations of photovoltaic power and helping
to stabilize the grid.
The consortium already has two plants in operation
in Morocco and Egypt. Morocco hopes to upgrade its
existing transmission line to Spain and install 2000
megawatts of solar power capacity to supply both
its own needs and to tap into the lucrative European
For solar, like wind, the main challenge to overcome
is the absence of a coordinated regulatory and legal
framework, such as guaranteed feed-in tariffs, power
purchase agreements or investment guarantees to underpin
investment in the technologies. Desertec seeks to
create a single legal framework that can be adopted
by many different countries.
Ultimately, solar backers say, costs are likely
to decrease rapidly as more power plants are built
and technological progress continues, allowing Saharan-powered
solar energy to be as competitive as fossil fuels
in less than 10 years.
Hydropower is a large-scale solution to creating
sustainable energy. Tapping into Africa's vast
river systems opens up a world of energy possibilities.
The Grand Inga Dam project, which plans to harness
the enormous potential of the Inga Falls on the Congo
River in the Democratic Republic of Congo, is perhaps
the most high-profile example.
The project could produce as much as 39,000 megawatts
of electricity, according to the London-based World
Energy Council, more than one-third of the continent's
current electricity output. Two other small power
plants have already been built on the site and a
third is currently in the design phase. In addition
to exporting energy to southern Africa, the project,
which is expected to cost as much as $70 billion,
could transmit energy as far as Egypt and Nigeria,
and potentially to Europe via high-voltage lines.
Political instability will make security an overriding
challenge. Yet a clear and coordinated legal framework
and strategy for refurbishing transmission lines
to export Grand Inga's power are the main preconditions
for the project to gain sufficient financial backing.
Grand Inga has huge potential but will need strong
leadership to achieve it, according to Boris Martor,
head of the African group for U.K. law firm Eversheds,
which has advised DRC state-owned utility SNEL, since
"Right now, there's no coordination to get
it off the ground. There needs to be a leading company
or multilateral organization," he says, adding
that the project is likely to remain on hold at least
The pinnacle of sustainable development
is a system that rewards changes of behavior on
an individual level and at the same time allows families
to raise themselves out of poverty.
This is easier said than done, particularly in Africa
where few individuals have bank accounts and most
people still eke out a subsistence living far from
the reach of established financial institutions.
San Diego businessman David Palella, however, thinks
he has found a way to overcome these difficulties.
His not-for-profit organization, Carbon Manna Unlimited,
has developed a system of direct micro-payments to
rural people who offset their carbon production through
the use of high-efficiency stoves.
The project aims to establish cell-phone based carbon
micro-credit systems, using a simple message service
to allow families to monetize the carbon offsets
they produce. Its key advantage is that it's based
on existing infrastructure. While few rural Africans
have landlines, mobile telephone ownership is rapidly
increasing, and companies such as Kenyan telecom
provider, Safaricom, have already introduced systems
that allow subscribers to transfer money via cell-phones.
"Africa has the most advanced cell-phone-based
payment systems using simple text," Mr. Palella
says. "You can establish a sustainable carbon
reduction project almost anywhere in Africa and share
the money through these systems."
Mr. Palella acknowledges that most voluntary emissions
reduction trading systems require those that benefit
from them to go through a series of time consuming
steps, as well as wade through the necessary paperwork.
This can be difficult to prepare and costly, especially
when it is contracted out to carbon project consultants.
Still, he notes that the voluntary emissions reduction
market in Europe is worth over $50 billion a year,
and that Carbon Manna is a sustainable, open-source,
micro-profit-sharing system in which the paperwork
can be standardized and streamlined.
Realizing a first demonstration project has been
tricky for Mr. Palella. A Kenyan offshoot strayed
from the guidelines of the original concept, he says,
while an Ethiopian project is looking to build its
system on the structure of an existing charity for
However, some industry experts say the expiration
of the Kyoto treaty in 2012, by disbanding the separate
United Nations emissions trading framework, could
potentially create more impetus for innovative approaches
such as Mr. Palella's Carbon Manna.
In a continent with little electrification, East
Africa is particularly vulnerable, lacking the
fossil fuels and natural resources of much of the
western half of the continent.
Yet the United Nations Environment Program believes
geothermal power sources, extending across the Rift
Valley from Ethiopia to Mozambique, could support
the region's power needs. Research by the U.S. Geothermal
Energy Association backs this ambition up. It estimates
there to be as much as seven gigawatts of geothermal
potential in the region.
The African Rift Geothermal Development Facility
was launched in 2010 to promote its use. The project
includes a regional networking system and technical
assistance program, supported by UNEP, as well as
a risk mitigation fund backed by the World Bank.
Kenya established the Olkaria fields, Africa's first
geothermal project, nearly two decades ago and continues
to be the only country in the region actively exploiting
Geothermal energy is expected to account for nearly
40% of Kenya's total power needs by 2012, with estimated
potential capacity of 7,000 megawatts, according
Mr. Connick believes that the unique nature of the
technology and absence of significant competition
in the development of geothermal projects means that
geothermal power is likely to be a later stage alternative
form of energy