Supplying a continent: energy access in Africa

I am starting a new series of several posts commenting on the supply and retail of electricity across Africa. This week’s post focuses on electricity access, with two future posts on the efficiency of electricity distribution and the structure of the sector across countries.

As of 2009, c.1, 317 million people (almost 20%) of the world’s population had no access to electricity. A significant proportion – 587 million lived in the African continent.

The chart below shows electricity access rates by country. The average rate for Sub Saharan Africa stood at 30.5% as opposed to 99% in North Africa. Uganda, Malawi, DR Congo, Mozambique, Tanzania, Burkina Faso and Lesotho had particularly low rates of approximately 10% with rural access below 5%.

Electricity access rates by country as of 2009

Source: IEA 2011 World Energy Outlook, see http://www.worldenergyoutlook.org/resources/energydevelopment/accesstoelectricity/

Some explanation for the low access seen…

There are several reasons for the low access rates (See for instance World Bank Group Energy Sector Strategy, Addressing the Electricity Access Gap, June 2010). These include, in no order:

High costs of supply – most African countries have low urbanization rates with large rural and peri-urban populations with low population densities. This makes the cost of extending the distribution and transmission network and the cost of connection especially expensive. According to the Rural Electrification Authority, it costs an average of $10,000/km to develop a medium voltage overhead line in Kenya. Moreover, this hard-to-reach population is often the poorest. As the chart below which maps electricity access and urbanization rates across countries shows, there is a moderate correlation between urbanization rates and electricity access. Uganda, Malawi, Kenya, Ethiopia are not only the least urbanized states in the continent, but also have the lowest electricity access rates as well. Conversely, Ghana, South Africa, Tunisia, Libya, Algeria are all relatively urbanized and have high access rates.

Relationship between urbanization and electricity access

Source: Urbanization rates as of 2013 – World Bank Indicators; Access rates as of 2009, see IEA 2011 World Energy Outlook,  http://www.worldenergyoutlook.org/resources/energydevelopment/accesstoelectricity/

Lack of appropriate incentives – the high cost of supplying rural areas coupled with limited capacity to pay for supplies makes it difficult for electricity companies to connect more households. High upfront costs of connection (wiring costs and connection costs) remain a barrier absent subsidies and tariff structures that are appropriately designed to recover the significant costs of connecting rural populations (see discussion of connection charges below).

Weak implementing capacity – successful rural electrification programs require political commitment, adequate resources both internally or in tandem with external partners and strong project management – not exactly the types of competences most state owned organizations are renowned for in Africa. It is instructive to note that countries which have reformed their electricity markets and/or privatized electricity supply companies have seen significant improvements in access rates (see examples of Uganda and Kenya below).

Shortage of generation capacity – most countries suffer from near permanent load shedding – and do not have even enough capacity to meet the existing already connected demand, this means that new (often loss making) rural connections are always a second order business.  One tried mechanism for solving this (and lack of capacity) is to hive off responsibility for rural connections to an independent organization which can prioritize this (countries with a Rural Electrification agency include – Uganda, Zambia and Kenya).

Increasing access – impact of electricity sector reforms

There has been some progress in the worst performing countries over the last decade. There are many reasons for this – including increased investment (across energy and transport infrastructure in general) and political prioritization at local and international levels. However, electricity sector reform that is ongoing (as shown in the examples of Uganda and Kenya in this section) has also contributed.

As noted above, Uganda and Kenya have some of the lowest access rates in the continent. Both countries have enacted significant sector reforms which have led to improvements in the electricity sector. Since mid-2000s, power generation increased steadily, distribution losses declined, and the number of customers served by grid-supplied power increased substantially.

Electricity sector market reform in Uganda began with the passage of the Electricity Act (1999); the establishment of a regulatory agency (2000); and the unbundling of the power utility (2001) and concessioning of its parts (2003–05). In 2006, power tariffs were almost doubled, raising the average effective tariff to US$.018 per kWh to reflect long-run marginal costs of power (See Trevor Alleyne, et al, Energy Subsidy Reform in Sub-Saharan Africa Experiences and Lessons, IMF, 2013).

In Kenya, reform efforts culminated in a new energy policy in 2004, substantial increase in power tariffs in 2005 to reflect long-run marginal costs, introduction of an automatic pass-through mechanism to adjust tariffs for changes in fuel costs, and reconstitution of the Electricity Regulatory Commission (See Trevor Alleyne, et al, Energy Subsidy Reform in Sub-Saharan Africa Experiences and Lessons, IMF, 2013).
 
In future posts discussing distribution efficiency and losses, and the role of the private sector we will revisit these and other countries. However, in terms of access, after limited progress early on, the number of customers with access to grid-supplied power in Uganda doubled between 2005 and 2013 while in Kenya it nearly tripled during the same period.

Connections growth in low access countries – Uganda and Kenya

Sources: Uganda - Annual report and IPO Prospectus for Umeme Ltd; Kenya – Annual Reports, Kenya Power; Ferdsult Engineering Ltd  http://www.ferdsult.net/concession.html; West Nile Rural Electrification Co.Ltd, see http://edoc.hu-berlin.de/series/sle/245/PDF/245.pdf; Kilembe Investments Ltd, see http://kilembeinvestments.com/index.php/about-kil/background

Connection charges…

Despite the examples highlighted above, challenges remain. It is possible to write several blog posts on each of the remaining challenges, however, in this post, I will zero in on connection charges as an impediment to increasing access.

Of the lowest access countries, Kenya has seen significant improvements.  ‘Access’ – defined as households living within 1.2km of Medium Voltage (MV) / Low Voltage (LV) line has improved considerably, rising from approximately 10% to over 80% over the last decade. Connectivity, however, defined as actual connection to electricity has barely improved as shown. This is because each household has to pay a connection charge of Sh32,480 ($400) for a single phase connection or Sh44,080 ($540) for a three phase connection.

The table below provides a snapshot of the minimum connection charges paid by households for electricity connection in Tanzania, Uganda and Kenya (see EED Advisory, Energy Access Review, June 2014). The per capita income across all three countries is fairly low - $572-994 as shown below, meaning to connect requires almost 40% of income in Kenya. So long as these charges remain, it will be difficult to increase connection substantively.

Minimum domestic connection charges in US$

Sources: EED Advisory, Energy Access Review, June 2014; GDP per capita (current US$), 2013, World Bank Indicators

The result of these charges is that although access has improved significantly, connectivity remains challenging – and may stall (Kenya Power has recently threatened to stop rural connections in favor of urban connections because of costs).  For a detailed analysis see Kenneth Lee, Eric Brewer, Carson Christiano, Francis Meyo, Edward Miguel, Matthew Podolsky, Javier Rosa, and Catherine Wolfram, Barriers to Electrification for “Under Grid” Households in Rural Kenya, NBER Working Paper No. 20327, July 2014.

Access vs. connectivity – the long term challenge of improving access

Sources: Access -% of population living 1.2km near a line based on REA press releases, 
Connections based on KPLC Annual Reports – calculated as domestic connections x average household size / population; population data - http://data.worldbank.org/country/kenya; average household size - Urban Poverty and Vulnerability
In Kenya, Background analysis for the preparation of an Oxfam GB Urban Programme focused on Nairobi, Sept 2009. For methodology see Catherine Wolfram, Power Africa: Observations from Kenya, July 15, 2013 at 
http://energyathaas.wordpress.com/2013/07/15/power-africa-observations-from-kenya/

There are several ways of dealing with high connections charges. The simplest is by providing a one-time connection subsidy to poor households who can afford to pay for internal wiring of the house and the energy consumption costs once connected (tried in Uganda and elsewhere).

Loans are also a solution. In Côte d’Ivoire a revolving fund allows potential users to borrow interest free loans for up to 2 years to finance a maximum of 90% of the cost of connection. Botswana has a similar program where the government offers loans of up to 95% of the cost, payable over 15 years at prime interest.  Loan schemes can also be operated by local banks and electricity supply companies. Kenya Power for instance operates several loan schemes. In partnership with Equity Bank (one of the largest financial institutions in the country) it offers those living within 600 m of a transformer an option of paying 30% upfront with the balance as a loan repayable over three years at an annual interest rate of 15% (extremely high – but comparable with commercial non-secured loans in the market) (see Raluca Golumbeanu and Douglas Barnes, Connection Charges and Electricity Access
in Sub-Saharan Africa, World Bank Policy Research Working Paper 6511, June 2013).

Senegal’s approach probably makes the most sense (and it’s a puzzle why other markets haven't at least tried it) – the local supplier provides financing for connections and wiring at a regulated interest rate which is then recovered in form of higher bills.

Conclusions:

Universal access to electricity would have significant, social, and economic impact on those currently without access.  Despite the low rates of access across the continent (and particularly East Africa), the picture is looking brighter than it seems – in countries that have made a concerted effort, access rates have improved significantly over the last decade, which makes me hopeful that the universal access rate by 2030 may just yet be met.

Powering the continent: nuclear energy

The focus of my posts so far has been to consider the case for renewables in the continent. I think the evidence laid so far is supportive of a strong case for renewable deployment. It is a case; I will continue to make with additional evidence. In this post however, I’ll make a detour to consider the case for nuclear energy.

A resurging interest in nuclear…

There has been an increasing interest in the development of nuclear energy in the continent.  In the East, Kenya established the Kenya Nuclear Electricity Board whose primary mission is to fast track the development of nuclear electricity generation in Kenya.  Further west, in March this year, speaking at the Nuclear Security Summit at The Hague, President Goodluck Jonathan announced Nigeria’s intention to develop nuclear power plants.  The country is planning to commission its first project, a 1,200 MW plant by 2020 and an additional 2,800MW by 2030. The previous government in Senegal announced in 2010, that it was considering building a nuclear electricity plant with French assistance with a timeline for 2020 commissioning.

The status (and brief) history of nuclear energy in Africa…

South Africa is the only country with operational nuclear power plants. It has two plants - Koeberg 1 (930MW) and Koeberg 2 (900MW) for a total of 1,830MW. These plants commenced operation in April 1984 and July 1985 respectively and are due to close in 2024 and 2025 respectively.  In addition to South Africa, 8 countries have research reactors – developed mostly during the cold war period. These are mostly small scale plants and are shown in the chart below.

Sources: International Atomic Energy Agency Research Reactors Database, http://nucleus.iaea.org/RRDB/RR/ReactorSearch.aspx; World Nuclear Association Information Library, http://www.world-nuclear.org/info/Facts-and-Figures/World-Nuclear-Power-Reactors-and-Uranium-Requirements/ http://www.world-nuclear.org/info/Country-Profiles/Countries-O-S/South-Africa/

Why the previous renaissance failed?

Despite the considerable interest in nuclear energy in the 1970s to early 1980s, widespread adoption never materialized (the Nigeria Atomic Energy Commission for instance was constituted during this period in 1976). I suspect even in its heyday in the early 1970s, (despite the generosity of Eastern and Western blocs) and a laxer attitude towards safety relative to now, the economics did not make sense. Most nuclear power plants built during this period were state financed or built with public money which most of the newly independent countries simply did not have.

The economics of /cost competitiveness of nuclear and commentary on its potential

The question then is whether things have changed, that is whether the economics makes this new renaissance enduring compared to the last. From a levelised cost basis (presented below) nuclear appears to be reasonably attractive and cost competitive.  It costs approximately $96/MWh – more expensive than geothermal, hydro or wind, but certainly cheaper than solar. It is also comparable to coal (the subject of a future post). On this basis, the answer to whether we should consider it is a qualified maybe.

Costs of wind, and other power generation technologies in $/MWh 

Source: US Energy Information Administration (EIA), Levelised Cost of New Generation Resources in Annual Energy Outlook 2014, April 2014

The cost metric cited above, however hides a few important aspects of nuclear which makes it unique as an investment case. Nuclear requires a lot of upfront expenditure.  It costs approximately $5,500 per kW. Given that most new plants are likely to be sized at 1,200MW or greater; this simply means that a single plant would require $6.6 billion. And that does not guarantee that it will be on time and on budget. Recent projects in Flamanville, France and Olkiluoto Finland have experienced significant cost and time overruns due in part to new designs, project management or other reasons. EDF’s Flamanville 1,600MW reactor originally had a cost estimate of €3.3 billion (in 2005) which has since been revised to €8.5 billion. If we conservatively assume a 50% cost overrun (less than EDF’s experience), we are still looking at roughly $10 billion in upfront capital expenditure.

(a) Can we afford this?

There are three crude measures of assessing whether nuclear should be an option. The first is financial – do most countries have the budget to finance a nuclear programme or not?
The chart below shows that the cost of a single plant is basically more than the annual revenues collected by all but nine countries. Moreover, if you assume a prudential threshold that the cost of a single project should not be more than 10% of annual revenues, then only a single country meets this threshold – South Africa.

Estimated national budget in $ million - 2011

Source: CIA World Factbook – See https://www.cia.gov/library/publications/the-world-factbook/fields/2056.html

I appreciate that such a project would be financed in part using long term debt, and that the capex would be over a 5 year period of time, so potentially affordable by a few more countries. In addition, there is a case that several countries combining forces could feasibly finance such a project. However, this does not detract from the fact that as an undertaking, outside South Africa, almost every other country would struggle to finance a single plant.

(b) Can the national power systems cope with this?

The second test is whether the electricity system in most countries could cope with this. The simple answer is that most national systems would not cope. Of the 49 countries shown in the chart, in all but 16, a single 1,200MW nuclear plant would provide more than the existing installed capacity. Of the remaining 16, with the exception of South Africa, Egypt and Algeria, a single plant would provide more than 15% of existing installed capacity, posing considerable challenges for grid operation.

Estimated size of the electricity system in MW of installed capacity - 2011

Source: US Energy Information Administration (EIA), International Energy Statistics - Total Electricity Installed Capacity by Country, 2011

Since electricity cannot be stored and is consumed when produced, the system operator normally keeps as reserve, enough capacity to back-up the single largest plant to ensure that in the event the plant fails, demand can still be met. Installing a 1,200MW reactor means that you would need a significant amount of back-up, probably equal to the size of the plant. You are therefore looking at over 2,400 in new capacity to ensure supply.

From the chart above - that is more than most countries currently have and would likely require significant investments to strengthen the grid and provide back-up just to ensure the plant can operate. It is possible that with greater regional grid interconnection this is less of an issue; however it is an important disadvantage of nuclear plants.

Four UK nuclear reactors owned by EDF Energy (2,300MW capacity) were shut down a few weeks ago for safety reasons following a routine inspection and are now likely to be offline until November or December this year – imagine having to suddenly shut down 50 or 60% of national electricity supply for several months to get a sense of the scale of the challenges nuclear would pose.

(c) How about safety?

Public perception of the safety of nuclear energy has been shaped by accidents such as Chernobyl, Three Mile Island and most recently Fukushima. Although there is considerable debate on the risk of nuclear energy, I personally think safety as a concern is overstated and with a robust safety infrastructure and regulatory regime, nuclear can be a safe means for generating electricity.

Having said that, developing such systems takes time and significant resources, which I am not confident any of the countries outside South Africa currently have or are likely to develop over the next decade.  Take Nigeria for example, last year it graduated a total of six nuclear engineers (very limited technical expertise) and in late March, nuclear scientists working for Nigeria's Center for Energy Research and Development, Obafemi Awolowo University, the Center for Energy Research and Training and Ahmadu Bello University threatened to picket the Nigeria Atomic Energy Commission (NAEC), if nothing is done to settle their back unpaid salaries (cannot even pay those available).

Success therefore will require a comprehensive legal framework and developing competences in licensing, monitoring and supervision of compliance with safety standards and security guidelines consistent with international /IAEA standards; investments in emergency preparedness, security measures, and environmental protection and establishing long-term financial arrangements for decommissioning and radioactive waste management as well as the associated liabilities.

Conclusions

I think the case for nuclear energy is fairly weak – most countries cannot afford it, existing grids would be unable to cope with it and the infrastructure and regulatory framework to ensure its safe operation is simply not in existent. Considering nuclear in my opinions is a bit like planning to spend your life savings on a Ferrari, when a Toyota or a Kia would do just fine.

*PS: 140,000 businesses / villages or households, each installing an average of 40kW, and spending c.$80,000 per unit, basically gives you the same amount of output - and far easier to achieve than financing a $10b programme!

Powering the continent: the counterfactuals – cost of generation

Over the last couple of blog posts, I have been reviewing the current status of deployment, cost competitiveness and long term potential of various power generation technologies in Africa.  In last week’s post I reviewed the costs of diesel generation – the primary means for power generation in rural Africa.

In this week’s post we review the costs of power across the continent. I am currently trying to pull together data on actual retail tariffs by country from disparate sources, but this is much harder than anticipated due to paucity of data, so it will be awhile until I share this.

The aim of last week and this week's post is to try and assess whether what is currently used to generate power (be it diesel or others) is cheaper than the cost of building out renewables or whether renewable sources are in fact cost competitive already.

Shown below are estimated costs of generation by country from a study dating back to 2008. See

(a) Vennemo, Haakon, and Ornica Rosnes. 2008. “Powering-Up: Costing Power Infrastructure Investment Needs in Africa.” Background Paper 5, Africa Infrastructure Country Diagnostic, World Bank, Washington, DC;  

(b) Cecilia Briceño-Garmendia and Maria Shkaratan. 2008. “Power Tariffs Caught between Cost Recovery and Affordability.” Policy Research Working Paper 5904, World Bank, Washington, DC.

I have updated these using IHS CERA’s Power Capital Costs Index (PCCI) – without nuclear, as of Q1 2014 and with minor tweaks on my read of the assumptions. The PCCI tracks and forecasts the costs associated with the construction of a portfolio of 30 different power generation plants (coal, gas, wind) indexed to year 2000. These updates are intended to generate a very rough proxy (assuming not much else has changed) of current costs of generation by country.

Estimated costs of generation in Africa, $/MWh

Cecilia Briceño-Garmendia and Maria Shkaratan. 2008. “Power Tariffs Caught between Cost Recovery and Affordability.” Policy Research Working Paper 5904, World Bank, Washington, DC.
IHS CERA Power Capital Costs Index (PCCI), See http://www.ihs.com/info/cera/ihsindexes/index.aspx

I have superimposed a red line – cost of wind; and a black line (cost of PV), and presented the same information in map format as well. Where costs are higher than those of wind and solar, these highlight cost competitiveness and vice versa.

Estimated costs of generation in Africa, $/MWh - and competitiveness of solar PV/wind

In over half of the countries presented, (assuming the costs of generation shown are reasonably accurate) means that developing solar / wind at today’s costs should be a no brainer.

In future posts, I will tackle why despite the economics, outside of South Africa, were are still seeing limited growth in power generation in general and renewables specifically. We will also review potential models for delivering solar (I am particularly intrigued by M-KOPA Solar model and similar small scale distributed generation models).

Powering the continent: the counterfactuals – diesel power generation

Over the last couple of posts we have been looking at the status of various power generation technologies in Africa, their current status of deployment, cost competitiveness and long term potential to contribute to powering the continent.

In this post and in the next couple of posts, we assess the counter-factual – that is the status quo means for generating electricity, particularly in rural off-grid locations.

Besides firewood, one of the commonest sources of energy or power is small scale diesel powered generators. By assessing the equivalent cost of generating using diesel on a country by country basis we can compare with the costs of most of the renewable technologies assessed.

This approach is not novel (see for instance Szabo et al, Energy solutions in rural Africa: mapping electrification costs of distributed solar and diesel generation versus grid extension, Environ. Res. Lett. 6 (2011) 034002 (9pp)).

The Figure below shows retail diesel prices in Africa, as of November 2012, in UScents/litre as reported by GIZ, the German Agency for International Cooperation.

Retail diesel prices in Africa, as of November 2012, UScents/litre – GIZ International Fuel Prices, 8th Edition

Source: International Fuel Prices, 2012/13, GIZ (German Agency for International Cooperation), 8th Edition, see

As highlighted by the GIZ report, most North African (and oil producers) have historically tended to subsidize fuel prices. However, across the continent, most countries do not subsidize diesel prices. I have converted these prices to a levelised cost equivalent for diesel generation - by country as shown below.

Estimated cost of diesel power generation in Africa, $/MWh

In this chart, we compare the equivalent cost of power generation using retail-priced diesel against solar PV and wind as described in previous posts.

Conclusions: Across the continent both solar and wind are currently generally cost competitive against diesel powered generation (assuming delivered diesel prices). In fact in most cases, the case for renewables is overwhelming.

In future posts we'll consider some of the barriers as to why we are not seeing a significant uptake despite the obvious economic case and the regulatory and policy recommendations to overcome those barriers.

Powering the continent: Wind power in Africa

This post continues our series reviewing the status of various power generation technologies in Africa, their current status of deployment, cost competitiveness and long term potential to contribute to powering the continent.

Wind power is a widely deployed renewable technology with 318,105 MW of capacity installed worldwide as at the end of 2013 – with 35,289 MW was installed in 2013 alone (GWEC*).

Wind technology description

Wind energy has been successfully exploited for hundreds of years (e.g. to pump water). Modern wind turbines convert wind energy using wind turbines to produce electrical power. Energy in the wind turns 2-3 propeller-like blades around a rotor. The rotor is connected to the main shaft, which spins a generator to create electricity.

Wind turbines are mounted high on a tower to capture the most energy (these can be very high - total height for Vestas V164-8MW is approximately 220m high).  At such distances they can exploit faster and less turbulent wind (EERE**).

KenGen Ngong Hills Wind farm

Source: Thanks to EmmandKeith's Blog, see http://emmandkeith.wordpress.com/kenya-1/

Onshore wind - Installed capacity and projects under construction in Africa

Wind power is relatively new to the continent but its deployment is poised for significant take-up. As at the end of 2013, the continent has 1,200 MW of capacity installed (GWEC).  As shown below, there are significant pockets around North Africa, the horn of Africa and the Southern tip of the continent with good wind speeds that would enable considerable deployment.

Wind resource potential in Africa...

Source: E. Bartholomė, et al, The availability of renewable energies in a changing Africa Assessing climate and non-climate effects, Joint Research Centre of the European Commission, 2013, see http://iet.jrc.ec.europa.eu/remea/sites/remea/files/reqno_jrc81645_final_report.pdf

Despite the considerable deployment, deployment remains low. There are approximately 60 projects either completed, under construction or proposed with a capacity of 3,320MW (should all the announced projects go ahead, an additional 2,120 MW would be added).

Wind deployment in Africa (projects in operation, under construction or in the pipeline)

Source: The Wind Power, http://www.thewindpower.net/windfarms_africa_en.php and other news sources

Onshore cost competitiveness and commentary on its potential

Onshore wind has the advantage that it is scalable – it is feasible to develop anywhere from a single turbine to hundreds of turbines. It can therefore be used to power isolated communities or to connect to the grid.

It is also cost effective and relatively commercially mature compared to other renewable technologies. At a levelised cost of $80/MWh, it is cheaper than new hydro plants at $84/MWh; solar thermal and PV at $243/MWh and $130/MWh respectively. It is also competitive against coal ($96/MWh).
Despite these advantages, it is intermittent and not dispatachable (unless backed up with battery storage).

Costs of wind, and other power generation technologies in $/MWh 

Source: EIA, Levelised Cost of New Generation Resources in Annual Energy Outlook 2014, April 2014

Conclusion: Wind has considerable potential in the continent and we believe it should be firmly in the menu of choices for countries with good wind speeds.

Sources: 

*Global Wind Energy Council (GWEC), Global Wind Report, Annual Market Update 2013, see http://www.gwec.net/wp-content/uploads/2014/04/GWEC-Global-Wind-Report_9-April-2014.pdf

**US Department of Energy, Office of Energy Efficiency and Renewable Energy (EERE), How does a wind turbine work? See http://energy.gov/eere/wind/how-does-wind-turbine-work

Powering the continent: Solar Photovoltaics in Africa

This post is part of a series reviewing the status of various power generation technologies in Africa, their current status of deployment, cost competitiveness and long term potential to contribute to powering the continent.

Solar Photovoltaics (PV) converts solar energy directly into electricity using a PV cell made of a semiconductor (or thin film), as illustrated below.

PV is the most widely-deployed, power generation technology, with 139,155 MW of capacity installed at the end of 2013 - 37,000 MW installed in 2013 alone.

PV technology description

Illustration of a solar PV system

Source: SBC Energy Institute, Solar  Photovoltaic, September 2013

PV power systems are usually classified according to two major types – those that are grid connected, that is convert direct current (DC) to alternative current (AC) in order to connect to the grid; and (b) those that are off grid – installed mainly to supply isolated areas or to create mini-grids (occasionally with generator back-up).  DC/AC conversion is not needed where system is only supplying a single point.

There are three commercially proven types of PV technologies at varying stages of maturity, with assorted prospects for the continent.

• Crystalline, silicon-based PV- this is the main commercially deployed PV technology and is the most efficient technology today. It accounts for 85-90% of all installed capacity. 
• Thin films – made from semi-conductors deposited in layers on a low-cost backing, and are less efficient, but cheaper. They account for 10-15% of capacity.
• Concentrated PV (CPV) - use mirrors or lenses to concentrate and focus solar radiation on high-efficiency cells.  

PV potential in the continent

Most parts of the African continent are endowed with abundant sunshine.  As the Figure below highlights, the levels of global radiation measured in terms of kWh/M2 – the darker the red shading the higher the radiation – and the higher the potential. Compare the shading for instance with Europe, which despite limited potential has been on the vanguard of solar deployment globally.

Source: http://acpobservatory.jrc.ec.europa.eu/content/photovoltaic-potential-africa

PV installed capacity and projects under construction in Africa.

Despite the abundance of potential highlighted, solar PV deployment is limited.  There is a small volume of off grid capacity installed that (difficult to quantify). However, from various sources, we believe as of to-date, there is 1,154MW of capacity operating or under construction. Of these, 83% or 952.3MW is in South Africa.

There is a further 2,055MW capacity that has been proposed or is in some stage of planning.
The diagram below shows all the known projects that are in operation, under construction, or proposed.
 

Source: http://www.wiki-solar.org/map/continent/index.html?Africa?f and other news sources

PV cost competitiveness and commentary on its potential

Solar PV has the advantage that it can be utilized off-grid and in small scale. However, at a levelised cost of $130/MWh, it is considerably more expensive than hydro at $84/MWh; geothermal ($48/MWh); coal ($96/MWh) or gas ($66/MWh).  It is also intermittent and not dispatachable (unless backed up with battery storage).

Source: EIA, Levelised Cost of New Generation Resources in Annual Energy Outlook 2014, April 2014

Despite the advantages cited, given limited grid infrastructure in much of the continent – PV has a considerable advantage particularly for application in rural areas.  Moreover, cost competitiveness has improved dramatically and will get better, while fossil fuels are likely to become more expensive. Average module cost is currently $0.7/W - 20% of what it was in 2007). As a result, total hardware costs are an increasingly small part of total system costs.

The majority of system costs are increasingly in soft costs such as installation labor, permitting, inspection, and interconnection, overheads & margins within the supply chain. These costs depend, to a large degree, on local costs, regulatory framework in place to enable solar as well as the scale of deployment.

Concluding comments: PV has a bright future in the continent as the cost of PV declines further in coming years, we expect to see significant investment in coming years and believe it will play a major role in powering the continent.

Powering the continent: Concentrated Solar Power in Africa

This post is the second in a brief series of articles, reviewing the status of various power generation technologies in Africa, their current status of deployment, cost competitiveness and long term potential to contribute to powering the continent.

There are two main types of solar power generation - Solar Photovoltaics (PV) and Concentrated Solar Power (CSP). PV generates electricity via direct conversion of sunlight in to electricity by photovoltaic cells (i.e. conduction of electrons in semiconductors). PV is the commonest type of solar technology with approximately 134GW of capacity installed worldwide as at the end of 2013 (we discuss the current status and long term potential of PV in Africa in a future post).

CSP technologies use mirrors to concentrate the sun’s rays to heat water and generate steam. The steam is then used to drive a steam turbine to generate power similar to conventional power plants. The steam can also be used in process heat applications such as injection to oil wells to enhance oil recovery, water desalination, cooling, or industrial processes.  As at the end of 2013, there were approximately 3.6GW installed worldwide.

Technology description / illustration of solar CSP system

Source: SBC Energy Institute, Concentrating Solar Power, June 2013

CSP electricity generation is similar for the power block to conventional thermal generation, making CSP well-fitted for hybridization with complementary solar field and fossil fuel as the primary energy source.  In fact Africa is a pioneer in this type of CSP power generation – there are three hybrid solar power plants that combine conventional gas power plant and a solar field to heat steam (called Integrated Solar Combined Cycle plant (ISCC).

There are four main types of CSP technologies - described below: Solar tower; Linear Fresnel; Parabolic Trough and Stirling Dish technology.  These are briefly discussed below.

Source: SBC Energy Institute, Concentrating Solar Power, June 2013

CSP installed capacity and projects under construction in Africa.

There are at least ten CSP projects installed or under construction in Africa – with a total capacity of 530MW concentrated in four countries (South Africa, Morocco, Algeria and Egypt) as shown. 

Cost competitiveness of CSP systems and comments on its long term potential inn Africa

One of the main reasons, CSP is not widely deployed is its costs. As shown below, it is much more expensive than other power technologies with equal promise in the continent. At a levelised cost of $243/MWh, it is considerably more expensive than hydro at $84/MWh or solar PV at $130/MWh (EIA).

Moreover, unlike PV which has seen capacity deployment and consequently, significant cost reductions from economies of scale - CSP deployment remains small.

Source: EIA, Levelised Cost of New Generation Resources in Annual Energy Outlook 2014, April 2014

However, the advantage of CSP is its storage ability. Thermal storage is relatively easy to integrate into CSP projects, and allows CSP plants to smooth variability, to firm capacity and to take advantage of peak power prices. CSP also offers a lot more opportunities for localization and manufacturing of components. 

In summary, good potential, but given current costs, we don't think we'll see many new projects beyond those listed (maybe the odd one or two projects to provide diversity to renewable deployment).