How to tap from Africa’s energy mix to accelerate economic development - Study

The Executive Secretary of the Public Utilities Regulatory Commission (PURC), Dr. Ishmael Ackah, on Monday, 14 February 2022 presented a paper at the 3-day Commonwealth Science Conference sub-Sahara Africa Follow-on Meeting from 14-16th March 2022 at the Ghana Academy of Arts and Science.

During the energy session, Dr. Ackah was part of the speakers who spoke on future technologies for the energy transition.

The Executive Secretary of PURC presented on ‘The Political Economy of the Energy Transition’.

The energy economist in his presentation hinted that Africa’s energy mix is dominated by hydro technology, apart from South Africa.

He said when South Africa is added, the energy mix for sub-Saharan Africa (SSA) is made up of 54 percent coal, 21.3 percent hydro, 11.5 percent gas, 6.2 percent oil and others 6.6 percent, according to a 2018 report by the International Energy Agency.

He opined that economies such as Nigeria, Angola and others are structured around the oil and gas industry.

In Angola, oil contributes about 70 percent of government revenues. He reiterated that petroleum revenues have been used for investments, social interventions and debt repayment.

For instance, oil revenue in Ghana is a major contributor to the Free Senior High School Initiative that has been rolled out as part of human capital development strategy.

He again said that about 730 million people in sub-Saharan Africa rely on the traditional use of solid biomass, mainly fuelwood, charcoal and dung for cooking – typically with inefficient stoves or simple three-stone fires, in poorly ventilated spaced.

Therefore, he was quick to add that transition implies diversified and competitively-priced energy sources that address the continent’s need for industrialisation and access in an environmentally sustainable manner.

He opined that there should be research, capital, resource base, and good governance to achieve this.

According to UNESCO Report, 2021, Africa’s gross expenditure on research as a proportion of GDP is about an average of 0.5 percent, compared to the world average of 2.2 percent. There is no known country in Africa that is spending 1 percent of its GDP on research.

Dr. Ackah said in his presentation that while some SSA countries lack reliable electricity infrastructure, there is a potential opportunity to develop these infrastructure in a more sustainable way than other than countries have done in the past through a move toward national electrification.

He said countries that can provide low-cost, carbon-free generation can prosper from abundant solar and wind resources.

How can these be financed?

By investing in cost-reducing technologies, adopting a pay-as-you-go arrangement to help spread upfront cost of renewable energy technologies; structuring payments for new renewable energy technologies so that they are similar to costs of the energy sources they are replacing; collaborative investing and engaging local investments; as well as alternative financing sources such as bonds, enhanced refinancing opportunities.

With regard to governance, Dr. Ackah mentioned that policy regulatory and institutional frameworks can lead to utility unbundling to open up competition, set multi-year tariffs with adjustment clauses, clear renewable energy targets, aligning with climate and sustainability targets, and clear and transparent procurement processes.

Again, information and technical capacity such as public education, research development, strengthening technical capacity as well as building domestic innovative capabilities – including skills for installing, maintaining and repairing renewable energy technologies – and engaging with local communities, including women, in training and maintenance of these systems.

He concluded by saying that Africa needs to be part of the value chain and not a mere consumer of technologies.

Also, natural gas as a Transbridger fuel – Gas is cleaner and is a good complement to renewables.

Natural gas can support the continent’s economic transformation through chemical production, fertiliser manufacturing, cement, and clean cooking fuels. Leaving natural gas in the ground will only delay or deny Africa’s chance of industrialising.