The United Nations Economic Commission for Africa (UNECA) has estimated that the African continent requires $40 billion annual spend to meet her energy needs.
In a study titled “Energy Prices in Africa: Transition Towards Clean Energy for Africa’s Industrialisation” UNECA disclosed that 600 million people in Africa do not have access to electricity and 900 million have no access to clean cooking fuel.
Meanwhile, electricity access rates in 24 countries are below 50 per cent.
According to UNECA executive secretary, Vera Songwe, at the launch of the report last week, “there is no way Africa can build a better continent if we do not make adequate investments in energy and ensure affordable access for all,” urging countries to ensure that there’s cost reflective pricing in the energy sector.
The report cites Liberia, Malawi, Central African Republic, Burundi, and South Sudan as having stagnated or reversed in electricity access. Countries like Nigeria, DRC and Ethiopia reportedly have the biggest electricity access deficits.
“Access to cheap and clean energy is an essential component of Africa’s transformation and industrialisation,” said Oliver Chinganya, director of the African Centre for Statistics (ACS), who moderated the session.
The ACS director said: “In the context of AfCFTA deployment and implementation, supplying economies with affordable fuel is integral to supporting actions for faster achievement of the Sustainable Development Goals and Africa’s Agenda 2063.”
The report deplores the fact that Africa relies mainly on fossil fuels and biomes instead of diversifying its primary energy supply, given its plethora of resources (renewable and non-renewable).
“Households use 86 per cent of biofuel and waste energy for cooking, while the transport sector consumes 78 per cent of oil. Natural gas is mainly used in the industrial sector.”
In his presentation, Anthony Monganeli Mehlwana, an ECA economic affairs officer, highlighted the “urgent need to invest in electricity infrastructure, diversify electricity supply and embrace modern renewables.”
In terms of prices, Mr. Mehlwana said “Levelised Cost of Energy (LCOE) or fossil power plants is more expensive” than wind and solar.
“Onshore wind costs $59 per MW while utility solar PV costs $79 per MW. Meanwhile, the cost of coal is $109 per MW and natural gas stands at $74 per MW.”
He pointed out that “high energy production costs, transmission and distribution losses (18-25 per cent) means that utilities need to be constantly bailed out and subsidies implemented for users.”
At this rate, and according to the SDG 7 tracking report, Africa will not meet the SDG 7 targets due to limited supply and access to electricity. About $40 billion worth of investments per year are needed to meet the continent’s energy needs.
The report recommends that countries must provide an enabling environment for crowding-in private sector investments in the electricity sector; apply cost reflective tariffs while paying attention to efficient generation of electricity to lower the costs; and provide incentives and mechanisms to increase the share of renewable energy in the power systems.
The study also highlighted the need for countries to introduce natural gas as a transitionary fuel to replace coal and facilitate full deployment of renewables