Africa is home to 60% of the world's highest quality solar resources, but only 1% of the world's installed solar power generation capacity. An underdeveloped industrial sector prevents solar developers from exploiting the continent's vast solar potential, but in a world of increasing energy demand and more pressing demands for decarbonisation, the renewable energy industry can no longer ignore Africa and Africa.
By 2021, almost half of Africa's population, some 600 million people, will have no access to energy. As the continent's population grows (one in four people on the planet will live in sub-Saharan Africa by 2050) and the region industrializes, Africa's energy demand is expected to grow by a third over the next decade. To meet this demand, power generation capacity must increase tenfold by 2065.
So the question is how to solve Africa's energy triad? how to ensure that energy supply is 1. adequate, 2. affordable and 3. sustainable. The need is great, but so are the economic opportunities. The good news is that the African continent has enormous renewable energy potential, but tapping into its full potential will be extremely difficult. Obstacles to developing the solar energy value chain in Africa include "limited access to finance, lack of a supportive policy and regulatory environment, infrastructure constraints, limited local supply chains and a lack of skilled personnel and technical expertise," according to UN Energy Program chief Amir Barr.
Despite these many serious challenges, interest in the development of the renewable energy sector in Africa is growing rapidly. In recent years, international investors have rushed to get a foothold in what is undoubtedly a fast-growing industry. Russia and China have been investing in the development of African energy markets for many years, and Europe is increasingly pushing to build large solar power plants in the Sahara. As a result, production in Africa is on the rise after decades of decline. In fact, its value has quadrupled since the turn of the century, making it the fastest growing manufacturing sector on the planet.
But given that the continent is starting so late compared to European and Asian markets, will Africa be able to compete in the solar energy supply chain? The short answer is yes. A recent report by Sustainable Energy for All (a UN-backed organization) found that solar module production in a number of African countries is "already cost competitive with similar production in China". Chinese manufacturers currently dominate the global solar supply chain because they can produce panels much more cheaply than in the West, thanks to a more developed value chain, a deadlock in rare-country markets, a weaker currency and economies of scale. Although PV panels made in Africa are not as cheap as China, they are surprisingly close. “While it costs 16.3 cents per watt to install a PV module in China, markets including Tanzania (US 17.9 cents), South Africa (US 18 cents), Namibia (US 18.1 cents) and Ghana (US 18.3 cents) cost slightly more.
This cost competitiveness is partly due to the fact that Africa has large concentrations of the rare earth minerals needed to make solar cells. Moving PV production to Africa will not only be beneficial for companies seeking to develop a cost-competitive model, but will also boost local economies as it concentrates added value in countries and regions with sufficient silver, copper and silicon for production. The export of raw materials, rather than processed and manufactured components, is one of the main characteristics of an underdeveloped economy.
However, increased solar energy production in Africa is unlikely to help solve Africa's energy triad if all the parts and energy produced are destined for the international market rather than the local grids that desperately need them. The PV gold rush may certainly boost the economies of some African countries, but it will not help the continent bridge the energy gap or decarbonize the continent's energy balance without a concerted political effort. International development experts stress that African countries must control their own development or risk being exploited for their abundant energy resources without controlling the benefits.
Haley Zaremba for Oilprice.com
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