[OPINION] Africa’s power revolution
At the World Economic Forum in Davos this year, much has been made of Africa’s potential and what the Fourth Industrial Revolution will mean for Africa and its people.
An important part of realising these objectives will be to close Africa’s energy gap.
The 'Powering Africa' discussion at Davos, featuring Aliko Dangote (the owner of Africa’s largest cement manufacturer) and Cyril Ramaphosa (deputy president of South Africa), tackled some of the challenges and opportunities associated with closing Africa’s energy gap.
For Africa to industrialise and maintain meaningful economic growth, it would need sufficient base load generation. This new base load would power new industries and grow employment, keep hospitals running, light up schools and power Africa’s Fourth Industrial Revolution.
The generation of power in Africa will need cooperation from governments and the private sector.
Dangote mentioned in the panel that financing is not an issue once you had a credible project.
In order to expand energy across Africa we would need clear policy direction. We have seen evidence of this in South Africa’s renewable energy independent power producer procurement (REIPPP).
The REIPPP is a model of how clear policy certainty can attract private sector investments and solve crucial issues such as improving the energy generation capacity and diversifying the energy mix.
The replication of models such as the REIPPP throughout Africa may be the key to bringing the necessary base load generation capacity in scale while attracting much needed investment.
An important aspect to attracting private investments to African energy would be to ensure that adequate cost reflective tariffs were in place.
It will be important for new power projects to be done on a commercial basis to ensure that projects are bankable.
This would also need extensive planning and engagement from the public and private sector.
That the Fourth Industrial revolution has contributed to an accelerating reduction in the cost and technological advances of renewables such as solar and wind means that these forms of energy will form an integral part of Africa’s energy mix.
The addition of renewable energy and clean coal into the energy mix would assist in addressing climate change concerns as well as energy security.
In South Africa the REIPPP has proven very successful in bringing together the public and the private sector together to work towards a common goal. We hope to see more of this cooperation as it has helped government achieve its policy objectives and provided private investors with long-term investment opportunities.
Rob Hamer is head of Alternative Assets at Ashburton Investments.
Kekeletso Diale is a credit analyst at Ashburton Investments.
For more news, analysis and insights on Davos 2017 go to EWN’s WEF portal in partnership with Ashburton Investments.