Holistic planning and implementation that includes the full range of supply and demand side solutions, their interactions, and critically, productive use programs that allow homes and businesses to realize the full benefits of electricity, is critical.
NEW YORK (PRWEB) October 23, 2019
A new Rocky Mountain Institute (RMI) study, Creating a Profitable Balance: Capturing the $110 Billion Africa Power-Sector Opportunity shows that status quo energy systems could cost African nations up to $180 billion over the next decade, more than 2.5 times the 2016 gross domestic product of Kenya. If thoughtful action is taken, it is possible to save $110 billion over the next decade — but only through better planning.
On a continent where more than 600 million people lack access to reliable electricity, reform is necessary, so resources are not wasted. The current project-centered investment approach makes it difficult for governments and development partners to make informed investment decisions. The consequence is often higher energy costs than are necessary, due to costly or poorly aligned investments.
Instead, governments and their partners should focus on developing well-planned electricity systems in which investments in generation and transmission align not only with each other, but also with people’s demand.
“Procuring power is a necessary element of increasing energy access and driving economic development, but it is far from sufficient. Holistic planning and implementation that includes the full range of supply and demand side solutions, their interactions, and critically, productive use programs that allow homes and businesses to realize the full benefits of electricity, is critical.” said Eric Wanless, Africa Energy Program Senior Director at RMI.
Two factors were cited as key contributors to capacity imbalance:
1. A fragmented, project-focused approach that does not consider whole power system dynamics, including bottlenecks in transmission and distribution
2. Overly optimistic demand forecasts that are not accompanied by strong programs to create productive demand for power
Key recommendations for investors
- Challenge project developers to clearly articulate how their project fits into the overall system need and what steps they are taking to reduce risk in addition to securing government guarantees and/or take-or-pay contracts.
- Encourage and support governments in developing a transparent, collaborative and regular planning process if none exists or if those that do exist aren’t informed by on-the-ground realities.
- Diversify investments in the power sector to include critical transmission and distribution and enablers of regional trade and integration, and encourage governments to do the same.
The RMI Africa program currently operates in Ethiopia, Malawi, Nigeria, and Uganda and focuses on increasing access to and the productive use of sustainable electricity. RMI is a nonprofit organization and serves as an unbiased technical advisor to governments, utilities, developers and other energy stakeholders.
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Notes to editors
- The total cost of poor energy planning across Africa is $180 billion.
- The total cost that could be saved is $110 billion, reflecting the fact that some planned projects are already locked into contracts. Thus, they will happen regardless.
About the analysis
The analysis that underlies the findings presented was conducted jointly by RMI and the Tony Blair Institute for Global Change (TBI). RMI developed the analytical methodology using its experience working with governments and utilities in the region, and TBI created a detailed assessment of country-specific power projects as inputs into the model. RMI and TBI completed extensive analysis of a subset of investments in power supply across East and West Africa that expands on Power Africa funded work.
About Rocky Mountain Institute
Rocky Mountain Institute (RMI) — an independent nonprofit founded in 1982 — transforms global energy use to create a clean, prosperous and secure low-carbon future. It engages businesses, communities, institutions and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewables. RMI has offices in Basalt and Boulder, Colorado; New York City; the San Francisco Bay Area; Washington, D.C.; and Beijing.