Leveraging Renewable Energy for Growth

This African Transformation Map entry is published by the African Center for Economic Transformation (ACET) in collaboration with the World Economic Forum. African Transformation Map is co-curated by Dr. Edward K. Brown, Senior Director, Research & Policy Engagements, and Professor John Asafu-Adjaye, Senior Fellow and Head of Research at ACET.

Renewable energy has the potential to power Africa’s transformation given the right policies

Despite nearly two decades of steady economic growth in Africa, power shortages, restricted access to electricity and dependence on biomass for fuel are undermining efforts to reduce poverty. Africa currently has a substantial energy deficit, which is a major obstacle to its growth and development. Forty-three percent of people in Africa – around 560 million in total – have no access to electricity. There is a severe lack of access to clean, non-polluting cooking facilities. About 80 percent of Africans rely on traditional biomass, mainly fuelwood and charcoal, for cooking. As a result, about 600,000 people in the region die each year of household air pollution, of which nearly 50 percent are children under the age of 5 years. Sustainable Development Goal 7 aims to close the energy access gap and “ensure access to affordable, reliable and sustainable energy for all” by 2030. Achieving this goal in the required timeframe is a daunting task for African governments given the massive energy deficit.

Climate change poses a serious threat to Africa’s energy security due to the high dependence on traditional biomass. This is a key driver of deforestation, which further exacerbates climate change through CO2 emissions. Hydropower is another major source of energy in a number of African countries particularly for the generation of electricity. The effects of climate change on hydroelectric energy generation have already been witnessed with the recent droughts across the region that affected generation capacity in many countries, resulting in blackouts and load shedding. According to the 2015 African Progress Panel Report, the frequent power cuts result in losses estimated at 6 percent of turnover for large firms and as much as 16 percent for informal sector businesses.

Although climate change presents challenges to African transformation, the resulting increased temperatures and irradiance offer opportunities to harness Africa’s abundant renewable energy (RE) resources. These RE resources consist of concentrated solar power (CSP), photovoltaics (PV), wind energy, geothermal energy and bioenergy. According to the International Renewable Energy Agency, Africa’s total energy potential from CSP, PV and wind energy is about 1,590 petawatt hours. Development of RE systems for household, farm and industrial uses will reduce biomass utilisation for energy, help improve productivity, reduce carbon emissions, and improve living standards. Although the prices of RE systems have been falling steadily, the initial capital cost is still high and is a major barrier to entry into the market. Innovative business models could be used to lower costs. A good example is M-KOPA Solar in Kenya, which brings affordable solar energy to off-grid communities using mobile phone technology. African governments can also accelerate private investment in energy systems by improving the policy and regulatory frameworks, and by reforming highly-indebted, corrupt and inefficient state-owned power utilities.

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