REAPING THE REWARDS OF SUSTAINABLE ENERGY - Building an Africa-Europe partnership for a clean energy future
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SUSTAINABLE ENERGY SCOPING REPORT
REAPING
THE REWARDS
OF SUSTAINABLE
ENERGY
Building an Africa-Europe partnership
for a clean energy futureThe authors of this reference paper have contributed in their personal capacities,
and their views do not necessarily reflect those of the organisations they represent,
coordinating organisations, research partners or the European Commission.
Reproduction on whole or in part is permitted, provided that full credit is given
to the Africa Europe Foundation, and that any such reproduction, whether in
whole or in part, is not sold unless incorporated in other works.
The European Commission support for the production of this publication does not constitute an
endorsement of the contents which reflects the views only of the authors, and the Commission
cannot be held responsible for any use which may be made of the information contained therein.
Coordinated by Friends of Europe and Mo Ibrahim Foundation
In partnership with:
Research Partners: Institut de Prospective Economique du Monde Méditérannéen (IPEMED)
Policy Center for the New South (PCNS) | Next Einstein Forum
Fondation pour les Etudes et Recherches sur le Développement Economique (FERDI).
Publisher: Geert Cami
Author: Rim Berahab
Publication Director: Camilla Toulmin
Senior Manager: Amanda Rohde
Programme Manager: Raphaël Danglade
Editor: Paul Ames
Design: BNL Concept
© Africa Europe Foundation 2020CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUSTAINABLE ENERGY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
STATE OF PLAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
LOW RESILIENCE AGAINST CLIMATE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ENERGY PROFILES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
POLICY CONTEXT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE COVID-19 CONTEXT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
OPPORTUNITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
POLICY FRAMEWORK IN PLACE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
RE-DEFINING RESILIENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
MODERNISING THE ECONOMY THROUGH CLEAN ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE INVESTMENT LANDSCAPE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
MAKING THE MOST OF RENEWABLE ENERGY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
IMPROVING THE TRADE SITUATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
IMPROVING HEALTH THROUGH CLEANER ENERGY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
KEY CHALLENGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SHORT-TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MEDIUM-TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
LONG-TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CASE STUDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1. NOOR PROJECT, MOROCCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2. M-KOPA, KENYA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. ESKOM, SOUTH AFRICA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4. SILESIA REGION, POLAND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5. THE SMART BORDER INITIATIVE, FRANCE AND GERMANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6. THE NORTH SEA ENERGY COOPERATION (NSEC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
FOR THE STRATEGY GROUP’S CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
POTENTIAL ACTION AREAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
GUIDING QUESTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
REFERENCES AND FURTHER READING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25INTRODUCTION
In the face of a climate emergency and as strategic conversation through the Africa
both continents come to terms with the Europe Foundation Strategy Groups.
realities of the COVID-19 pandemic, there is a These independent fora will aim to
new sense of urgency for Africa and Europe influence decision-making, offer innovative
to come together to modernise and revitalise proposals for impactful initiatives, and build
not only their formal relations, but also inclusive networks with the will to create
the underlying narrative. positive change.
Both have a shared interest in implementing Meant to advise and provoke the Strategy
Agenda 2030, tackling global health crises, Group, this scoping report represents a
combatting the climate emergency, ensuring starting point. It provides a state of play on
food security and forging better connectivity. the issue at hand, an overview of challenges
and opportunities, and a selection of case
While 2020 has opened up new space
studies from across both continents. It also
for Africa and Europe to reimagine their
includes initial recommendations of points for
relationship and agree on areas for deeper
discussion and a list of guiding questions to
cooperation, 2021 will see ideas turned to
drive debate.
action, as the two forge ahead in revitalising
their relationship. The report also encourages the reader
to keep in mind the cross-cutting themes
This landmark year includes plans to hold the
which should underpin all Strategy Groups:
6th African Union-European Union Summit, as
climate, youth, gender, SMEs, governance
well as to deepen the Africa-EU partnership
and mobility.
across multilateral fora including COP-26, the
UN Summit on Food Systems, the UN high- We hope that you find the contents of this
level dialogue on Sustainable Energy and the report informative, and that they help you to
Global Health Summit. start thinking differently about the issues.
As Africa and Europe embark on this While extensive, the contents of this report
renewed partnership, Friends of Europe and are by no means exhaustive. We look forward
the Mo Ibrahim Foundation are delighted to digging deeper into the issues with you in
to play a role in driving an ongoing and the months and years ahead.
2 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020EXECUTIVE
SUMMARY
Africa and Europe are closely interconnected. For Africa and Europe, this is the moment to
Our common histories, strategies, and steer recovery towards investment in a green
institutions offer an opportunity to re-design transformation that builds resilience against
how we work together for the common good. climate change and leverages opportunities
at the nexus between climate action and
The scale of the global climate emergency
development. Sustainable energy provides
and the depth of economic and social
a chance to steer both continents towards a
damage from the COVID-19 pandemic
green recovery that delivers growth and jobs.
demonstrate the importance of transforming
our economies, to make them more resilient The COVID-19 pandemic creates space for
and better aligned with the objectives of the new ideas and strategies that can deliver
Paris Agreement. People and governments the transformation all continents need. All
around the world are searching for ways countries are aiming to spur an economic
to re-build economies and lay stronger recovery that revitalises hardest-hit sectors.
foundations for climate-safe growth. The ‘Build Back Better and Greener’ message
encourages governments to use post-
COVID-19 has shown how unprepared the
COVID-19 recovery packages to strengthen
global community is to deal with disasters on
inclusive and sustainable development which
this scale and revealed tendencies to retreat
can deliver a just transition to a climate neutral
into nationalistic approaches. This raises
economy by 2050. This new pathway offers
serious concerns over our readiness to deal
great potential for joint action and investment
collectively with the impact of climate change.
by Africa and Europe working together on a
However, it also provides us with insight
vision for growth that aligns the Africa 2063
into what is required to improve resilience.
Agenda and European Union’s Green Deal.
Perhaps, the greatest lesson we can learn
from the pandemic is the critical importance of Africa and Europe should cooperate to
collaboration, at all levels, among citizens and develop joint responses to the climate
between regions, countries and continents. crisis as well as investing in innovation
for economic and social progress.
EXECUTIVE SUMMARY 3OPPORTUNITIES • Achieving the Paris Agreement objective
of net zero emissions means ramping
• The African Continental Free Trade Area
up clean technology deployment while
provides (AfCFTA) a framework for energy
continuing to reduce costs and improving
cooperation with potential to transform
efficiency, especially through innovation
Africa’s economy. As the largest trade area
in renewable hydrogen and other low-
in the world, the AfCFTA should re-balance
carbon fuels, battery storage and Carbon
relations between Africa and Europe
Capture, Utilisation, and Storage (CCUS).
and create a more mutually beneficial
There are many technical and financial
partnership, notably in the energy sector.
options for spreading effective climate-
• Renewables have taken off, with solar smart technologies across Africa and
leading the way. However, a slowdown in Europe, including clean cooking, air
improving access to electricity and the risk conditioning and electric mobility. They
of under-investment in grids are warning could bring significant public health
signs for the future. The remarkable benefits, especially to women and children.
fall in the cost of renewable energy
Progress demands a joint effort by all
(whether solar or wind) has transformed
stakeholders. Governments, corporations,
the landscape for private and public
SMEs, farmers, city dwellers, NGOs,
investors, showing renewables can be
local communities, researchers and
more than competitive with fossil fuels.
others need to collaborate and form
• The COVID-19 crisis has squeezed alliances at local, national and regional
oil and gas revenues and investment, levels to explore solutions.
forcing producers to reassess their
strategies in line with technological and
policy shifts. The crisis prompted a rapid
reassessment of strategic options for
major oil-exporting countries, such as
Nigeria, Angola, Algeria and Egypt. The
risk of stranded assets has become very
real. Diversification away from fossil fuels
is increasingly seen as a way forward.
4 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020MAIN CHALLENGES • Transition to a sustainable energy
model requires a significant increase in
• Electricity generation has to be greatly
investment that combines local, national
expanded to meet current needs and
and global finance. African countries
Africa’s growing demand. The gap
continue to pay very large risk premiums
between demand and supply leaves
relative to other borrowers, despite the
630mn Africans without access to
pool of global capital seeking a productive
energy in Sub-Saharan Africa alone.
use. It is also estimated that despite
That lack of access for both residential
being in the final decade of action to
and commercial users causes significant
achieve the SDGs, current and planned
health and economic harm.
investments are falling short to bridge the
• Connectivity does not always guarantee gap between energy access and demand.
access to reliable power. The expansion
Only profound changes, guided by sound
of national grids in Africa is estimated to
policies, can deliver a better energy future.
have stalled in recent years and even
This is a choice for citizens, investors and
in areas where the grid is accessible,
companies, but most of all for governments.
service is often unreliable. Improving
At country level, national policy frameworks
the grid and promoting decentralised
can establish clear incentives for credible
energy systems have the potential to
long-term investments linking the public
increase the provision of electricity
and private sectors. To ensure long-term
across all the Regional Economic
private energy investment is forthcoming,
Communities (RECs) of the African Union.
the right regulations must be adopted
and implemented, with a clear vision
and planning that looks beyond the
short-term to the next 20 to 30 years.
EXECUTIVE SUMMARY 5SUSTAINABLE
ENERGY
Energy is central to economic growth and gas emissions are far lower than Europe’s
transformation. The rich countries of today due to its far lower levels of energy use.
were able, over the last century, to harness The remarkable and rapid fall in renewable
fossil fuels to power their economies and energy costs offers Africa a low-carbon
achieve high levels of per capita income. pathway to growth which avoids the risk of
Today, there is a wide gap between energy stranded fossil fuel assets and infrastructure.
consumption in the EU and in Africa: per
Speeding up energy transition in Africa
capita consumption of energy in Sub-Saharan
and Europe requires major investments.
Africa (excluding South Africa) is only 180 kWh
The energy transition on both continents
per year, compared to 6,500 kWh in Europe.
will be achieved more effectively
If Africa is to achieve rapid rates of economic through strengthened cooperation and
growth that raise living standards and a joint commitment to achieving the
bring about structural change, much more Sustainable Development Goals (SDGs).
investment is needed in energy generation The COVID-19 context highlights the
and transmission infrastructure. Energy need to accelerate ongoing initiatives that
efficiency must also be improved. It is reduce vulnerability to external shocks,
estimated that African energy growth is increase the diversification of the energy
mostly driven by biomass and waste (53%), mix and reduce dependence on primary
followed by petroleum products (28%). The commodity exports, including petroleum.
energy forms chosen by African countries
The development of renewable energy
in the future will have major consequences
projects in Africa and Europe offers a
for global climate change. Europe has
wide range of benefits, including the
a strong interest in helping shape such
potential to create millions of new jobs
choices in favour of low-carbon solutions.
in the preparation and deployment of
Energy generation and use are responsible energy infrastructure. At the same time,
for most greenhouse gas emissions. If Africa is an important source of minerals
Europe is to meet its ambitious targets and rare earth elements, such as lithium,
for 2030 and 2050, it needs to achieve cobalt, nickel and copper which are key to
a rapid transition to low-carbon energy renewable energy systems and storage.
systems. Africa’s per capita greenhouse
6 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020STATE
OF PLAY
LOW RESILIENCE AGAINST ENERGY PROFILES
CLIMATE CHANGE Energy is vital for everyday life. Although rich
Climate change and environmental in energy resources, Africa suffers from low
degradation are an existential threat levels of energy use. In 2018, Africans made
to Africa, Europe and the world. To up 17% of the world’s population but they
overcome these challenges, countries accounted for only 6% of global energy use.
need a sustainable growth strategy that Nevertheless, energy demand is growing
will transform them into modern, resource- fast thanks to Africa’s dynamic economies,
efficient and competitive economies. population growth and rapid urbanisation.
Africa is the continent that has contributed Africa’s total final energy consumption
least to climate change. Yet it is the most (TFC) is dominated by biomass fuels and
vulnerable to climate impacts, a situation waste. They accounted for 53% of TFC on
exacerbated by its limited adaptive capacity. average from 2010 to 2017, followed by
This exposes Africa to challenges related to petroleum products on 28%. In contrast,
food security, water supply, biodiversity and electricity, natural gas and coal averaged
climate-related diseases. Climate change also 9%, 6% and 3% of TFC respectively. Wind
causes considerable economic losses, from and solar accounted for less than 1%.
flood-damaged infrastructure to drought-
Despite this, wind and solar consumption
related crop losses. The United Nations Office
has seen the largest increase, growing at
for Disaster Risk Reduction (UNDRR) estimates
an average rate of 37% over the 2000-
that climate change-related disasters at a
2017 period. In comparison, consumption
global level accounted for direct economic
of biomass fuels and waste grew at an
losses of $2.2tln from 1998 to 2017; other
average annual rate of just 2% and petroleum
disasters over the same period accounted
products at 4%. Overall, Africa is a net energy
for $0.7tln. The UNDRR specifies that in
exporter, selling 40% of its production.
Africa, for 2014 alone, the economic impact
of natural disasters amounted to $53.19bn. In 2018, the EU produced 42% of its own
energy, while 55% was imported. The Union’s
In Europe, the estimated costs of extreme
energy mix included petroleum products at
weather events amounted to $306bn in
36%, natural gas at 21%, solid fossil fuels on
2017, well above the 10-year average of
15%, 15% renewables and nuclear energy
$190bn. Those costs are expected to rise
on 13%. The share of renewables in energy
further as global warming continues.
consumption has increased continuously
since 2004, from 9.6% to 18.9%. The target
for Europe is to achieve 32% of total energy
needs from renewable sources by 2030.
STATE OF PLAY 7Africa has made significant progress in or place. To achieve this, the European
increasing access to electricity. The number Commission has proposed turning this
of people gaining access increased from political commitment into a legal obligation.
9mn a year from 2000 to 2013, to 20mn The Energy Union is the main policy
a year from 2014 to 2018. Nevertheless, instrument to deliver this transformation. It
Africa’s electrification rate remains the world’s aims to bring secure, sustainable, competitive
lowest and progress is uneven across the and affordable energy to all EU consumers
continent. In Europe, energy poverty is – whether households or businesses. The
a widespread problem: 50mn to 125mn Energy Union Strategy is made up of five
people, or one-fifth of EU citizens, are too closely interrelated and mutually reinforcing
poor to afford sufficient indoor heating. parts: (1) energy security, solidarity and trust;
(2) a fully-integrated internal energy market;
POLICY CONTEXT (3) energy efficiency contributing to lower
demand; (4) de-carbonising the economy; and
The African Union and European Commission
(5) research, innovation and competitiveness.
have placed energy transformation at the
heart of their Agenda 2063 and Green
THE COVID-19 CONTEXT
Deal visions. These two projects represent
a call to action for all segments of African The COVID-19 pandemic has inflicted
and European society to embrace clean high human costs and trapped the global
and affordable energy systems. economy in an unprecedented crisis. The
International Monetary Fund projects the
The AU’s strategic Agenda 2063 vision also
world economy will contract by nearly
seeks to accelerate the implementation of
4.4% in 2020 and recover by 5.2% in 2021.
energy sector initiatives that stimulate growth,
African countries have been affected to
sustainable development and regional
varying degrees. According to the IMF, Africa
integration. Among these initiatives are the
faces a drop in real per capita income of
Programme for Infrastructure Development
5.3%, a fall to 2013 levels. That represents
in Africa (PIDA), the African Development
an equivalent loss of around $290bn in
Bank (AfDB) High Five initiatives, the African
income for the region. In 2021, Africa’s
Renewable Energy Initiative (AREI), the
growth should recover modestly to 3.1%.
Africa-EU Energy Partnership (AEEP) and the
Sustainable Energy for All (SEforALL) Africa Pandemic disruption has triggered a
Hub. The AfDB’s ‘New Deal on Energy for significant drop in global energy consumption
Africa’ aims to help the continent achieve that has severely affected oil markets.
universal electricity access by 2025 with According to the World Bank, Brent crude
a strong focus on encouraging clean and prices dropped by nearly 63% between
renewable energy solutions. This will require January and April, from 63.6$/bbl to an
providing 160 GW of new capacity, 130mn all-time low of 23.4$/bbl. They increased
new on-grid connections, 75mn new off-grid slightly to 39.9$/bbl in June and 41.5$/
connections and providing 150mn households bbl in October, but that’s still 32% down
with access to clean cooking solutions. from 2019. This has exposed vulnerabilities
for Africa’s principal oil-exporters.
Similarly, the vision of the EU’s Green
Deal is for Europe to be the first climate- The COVID-19 outbreak has pushed the
neutral continent. It foresees an end to net EU economy into an unprecedented crisis.
emissions of greenhouse gases by 2050 Demand for electricity fell by at least 15%
and a decoupling of economic growth from during lockdowns. In Italy, at the height of
resource use while leaving behind no person the spring outbreak, electricity demand was
8 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020down by as much as 75% at times. The roll- Both the AU and EU place Africa and Europe’s
out of green energy has been slowed with a energy transformation at the heart of Agenda
decline of around 20% in related investment. 2063 and the EU Green Deal, under the
Overall energy use is expected to be down objectives of ‘Economies and communities
by up to 6% by end-2020. That’s seven times that are ecologically sustainable and resilient
the impact of the 2008 financial crisis. to climate change’, and ‘Making the EU’s
economy sustainable by turning climate and
OPPORTUNITIES environmental challenges into opportunities,
and making the transition just and inclusive
The time has come to identify opportunities
for all’. These two visions are a call for all
to unlock new avenues for economic and
segments of African and European society
social development over the years to
to work together to build a prosperous
come. A just transformation to a greener
and united Africa and Europe, based on
economy should be the foundation for
common values and a shared destiny.
relations between the two continents.
The strategic visions of the AU, through
POLICY FRAMEWORK IN PLACE Agenda 2063, and the EU, through its
Green Deal, also seeks to consolidate and
Much of the policy framework is already
implement various continental initiatives
in place, opening up opportunities for
in the energy sector to stimulate growth
accelerated change and new measures.
and strengthen regional integration.
Many African and European countries have
set out ambitious post-2020 climate action RE-DEFINING RESILIENCE
plans, known as Nationally Determined
The current situation offers a unique
Contributions (NDCs) and National Energy
opportunity to rethink the energy
and Climate Plans (NECPs). But further
system and improve its resilience
efforts are needed to improve resilience
better to absorb future shocks.
and create conditions for the “phasing-
out of coal, increasing development of It is clear that neither Africa nor Europe can
renewable energy in the energy sector, return to the pre-COVID system once the
investing in low-carbon, electric and public pandemic is over. Both continents need
transport in cities, developing sustainable to collectively redefine what resilience
power and land-use systems, including the means, and to develop initiatives at
restoration of forest landscapes, insuring the local, regional and international
direct investment towards resilient water level to better prepare for shocks.
infrastructure, and reducing emissions
A reinvigorated reform effort is needed
from major industrial value chains”.
urgently to spur growth. Even before the
The AU’s Agenda 2063, the EU’s Green crisis, many Sub-Saharan African countries
Deal, the UN 2030 Agenda for Sustainable required a fresh wave of reforms to lift growth,
Development and the Common African create opportunities for a wave of new job
Position on the post-2015 Development seekers and make progress toward the SDGs.
Agenda frame the socio-economic These reforms are also needed to boost
transformation needs, the challenges resilience and ensure that progress will not
posed by climate change and the goals be compromised or derailed by future shocks.
for African and European countries. The cost of delay is now higher than ever.
STATE OF PLAY 9The impact of climate change on hydrology THE INVESTMENT LANDSCAPE
in both Europe and Africa also underscores
Changing the investment landscape
the need for a diversified energy mix and
can attract finance which brings
stronger regional power pools. Planning and
benefits for people and the planet.
investment decisions for energy infrastructure
should be based on a combination of large- If Africa is to achieve its goals for energy
and small-scale systems that ensure climate- transition, access to energy and climate
resilient connectivity within wider networks. change adaptation, current investments
need to be multiplied by five to more
MODERNISING THE ECONOMY than $2tln over 2019-2040. That’s
THROUGH CLEAN ENERGY equivalent to 2.7% of regional GDP.
Clean energy offers a wide range of The transition to net-zero emissions will
opportunities to modernise the economies be positive for the European economy
of both continents. The current context has despite the significant additional
reinforced the urgent need to invest in African investments required. EU 2050 climate
and European energy systems through the plans foresee benefits of up to 2% of GDP.
increased deployment of renewables.
Investments are primarily needed in grid
Clean energy access would increase extension, reinforcement and maintenance;
energy security, while creating green low-carbon power capacity; and
jobs in the installation, operation and decentralisation. Identifying bottlenecks
maintenance of new infrastructure. hampering new energy investments, as
well as the choice of capital providers, can
In Africa, the post-COVID-19 recovery
make a big difference to the pace and
demands a strategic energy rethink. The
affordability of Africa’s shift towards more
crisis has highlighted the urgent need to
reliable, sustainable and affordable energy.
accelerate planned or ongoing initiatives
that can reduce vulnerability to external There is growing recognition that expanding
shocks, diversify the energy mix and reduce energy provision requires both public and
dependence on primary commodity exports. private investment because of the large-scale
and high-risk nature of the infrastructure.
For Europe, the crisis underlines the
Long-term private investment will only
importance of maintaining the momentum
be forthcoming where there are clear,
towards higher climate targets on the
legal contracts covering 20 to 30 years,
reduction of greenhouse gases, roll out
such as Power Purchase Agreements.
of renewables and energy efficiency.
A clear regional economic policy framework
is needed in Africa to integrate these visions
into a broader context of value creation and
employment opportunities. Renewable energy
can increase diversification, expand access
to electricity and clean cooking and improve
climate change resilience. Europe is currently
starting to experience such benefits and can
share the positive, as well as the negative,
lessons of its different energy approaches.
10 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020MAKING THE MOST OF to be even larger, creating an increase
RENEWABLE ENERGY of up to 3.7%. Global employment in the
renewable energy sector would increase
Endowed with very significant renewable
from 9.2mn, to more than 24mn by 2030. It
resources, Africa is in a strong position to
would improve health services, especially in
power its future economic growth with low-
remote areas, and support the empowerment
carbon, sustainable and resilient energy.
of women who accounted for 35% of the
Although renewable energy is growing fast, renewable energy workforce in 2016.
it is still far below potential. In 2019, new
Africa has the potential to install 310 GW
renewable energy capacity amounted to
of clean renewable power by 2030. That
50GW, but it is estimated that hydropower
would meet nearly 25% of the continent’s
alone could generate close to 1,200TWh
energy needs. Achieving those levels
per year, three times the current level of
requires a six-fold increase of the capacity
energy consumption in Sub-Saharan Africa.
installed in 2019. Regulatory reforms, policy
Africa’s solar energy potential is huge. innovation, mobilisation of investment and
Most of the continent enjoys more than development of human skills will all be
320 days of sunshine per year, twice needed to make that change a reality.
the average level in Germany. Wind
energy also offers major opportunities IMPROVING THE TRADE SITUATION
but they are less evenly distributed.
The African Continental Free Trade
Beside such renewable resources, Africa Agreement (AfCFTA) commits countries
holds abundant supplies of natural gas, to removing tariffs on 90% of goods,
which is seen as a valuable back up to progressively liberalising trade in services
variable renewables and an important and addressing a host of other non-tariff
transition fuel before hydrogen and power- barriers. Due to enter into force in January
to-x technologies become available. 2021, the agreement – when successfully
implemented – will create a single African
Decentralised power systems and off-
market of over a billion consumers with a
grid renewables can play a crucial role in
total GDP of more than $3tln. It will make
widening access to clean energy for all as
Africa the largest free trade area in the
foreseen in SDG7. It can help reduce losses
world. Implementation of the AfCFTA has
during transmission and distribution and
the potential to drive a green transition
ensure access for remote communities
in both Africa and Europe, if low-carbon
where grid extension is unfeasible. In that
provisions are included in the agreement.
way, renewable energy can improve energy
supply security, which is essential for reducing The agreement offers a new platform
vulnerability to external energy price shocks. for expanding Africa’s efforts in pursuit
of sustainable and inclusive energy
Accelerated deployment of renewable
development at the regional level,
energy, through far-sighted industrial
including through regional power pools.
policies and targeted skills development,
Implementation will also provide a
has the potential to create millions of new
stronger domestic and regional focus to
jobs in Africa. At the global level, doubling
supply chain development for energy-
the share of renewable energy by 2030
related technologies, R&D and skills.
could increase GDP by up to 1.1%, roughly
$1.3tln. The impact of renewable energy The AfCFTA also opens the continent up
deployment on global welfare is estimated to investors from Europe, Africa’s largest
STATE OF PLAY 11trading partner. The agreement offers SHORT-TERM
remarkable opportunities for investors to
Access to energy
achieve continent-wide success, but it comes
Although rich in energy resources, Africa
with risks due to the lack of inbuilt investor
suffers from precarious access to energy. In
protection. While trade in the AfCFTA age will
2018, the continent was home to 1.3 billion
be easier, investors will have to look outside
people, or 17% of the world’s population, but
for protection against unlawful state action.
it accounted for only 6% of global energy
Trade policies can also help build efficient consumption. Per capita energy consumption
supply chains and facilitate the movement in most African countries is much lower
of capital, people and information. Improved than the world average (about 0.7 tonnes
energy trade and energy integration initiatives of oil equivalent (toe) versus 2 toe).
can stimulate economic development in
Dynamic economies, growing populations
Africa by reducing transaction costs and
and rapid urbanisation mean energy demand
promoting commercial and economic
outstrips supply in many countries.
collaboration, especially with Europe.
COVID-19 has further exposed Africa’s
IMPROVING HEALTH THROUGH energy sector vulnerabilities, resulting in
CLEANER ENERGY supply and demand shocks and increased
pressures on existing energy systems.
The impact of cleaner energy on health
should not be underestimated. Clean cooking Lack of access to electricity is a major
is a priority for many African countries impediment to development. Africa
given health concerns surrounding the use has made significant efforts to increase
of traditional fuels. For example, Ghana access to electricity but its electrification
has been promoting the use of liquefied rate remains the world’s lowest and
natural gas (LPG) to replace traditional the situation has worsened with the
biomass for cooking. By 2018, 24% of the economic fall-out from COVID-19.
population relied on LPG. In Nigeria, LPG
Latest IEA estimates show that achieving
uptake is slowly displacing kerosene.
Africa’s goals for energy access will require
Many programmes support the distribution investment to increase to a cumulative
of improved biomass cookstoves and $1tln during the 2019-2040 period,
healthier alternative biomass-based roughly equivalent to 1.6% of GDP.
cooking fuels, such as bioethanol,
Clean cooking
biomass pellets, briquettes and biogas.
Lack of access to clean cooking is a
persistent issue in Sub-Saharan Africa.
KEY CHALLENGES
Access increased only marginally,
Energy transition has the potential to foster from 15% in 2015 to 17% in 2018.
Africa’s socio-economic development by
Adoption of cleaner cooking stoves has
sustainably reducing poverty and inequality.
increased in some countries in West and
However, a successful transition requires
East Africa. However, the number of people
a deep understanding of the major energy
without access surpassed 900mn in 2018,
challenges facing the continent, which
underscoring the fact that population growth
range from short-term shocks to complex
is outstripping efforts to ensure clean cooking.
structural challenges that have hampered
energy infrastructure for decades. Households rely on traditional biomass and
solid fuels, such as wood, charcoal, manure,
12 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020crop waste and coal. All pose significant production and distribution on the continent.
environmental, health and economic risks.
The asymmetry in CO2 and energy
Use of traditional biomass for cooking
generation between the two continents
is believed to be directly or indirectly
represents a significant opportunity to
responsible for nearly 500,000 premature
achieve development goals and meet global
deaths per year in Sub-Saharan Africa.
climate targets, such as by using certified
In addition, deforestation and the resulting offset trading, which could represent a
fuel scarcity adversely impact millions of win-win for both economies – driving down
people, mainly women and children, who net emissions while crowding in private
often bear responsibility for fuel collection capital to achieve low carbon growth.
and cooking. Fuel collection is one of the
Unstable electricity supply is often due
biggest contributors to women’s workloads in
to insufficient investment in new power
low-income countries, taking up time which
generation capacity and the deteriorating
could be spent on more productive activities.
performance of existing plants.
Progress in deploying improved biomass
Mobilising private capital is hampered
cookstove solutions has been slow due to
by a multitude of challenges. De-risking
lack of finance and scale. Supply chains
future investments has become a
for clean solutions are poorly developed,
critical necessity for projects to become
and consumer awareness, accessibility and
bankable. African countries need to step
affordability continue to be a challenge.
up efforts to address persistent barriers to
Responding to COVID-19 investment, such as the lack of regulatory
As a result of COVID-19, price volatility in clarity or stable policy frameworks.
oil markets has amplified the resource
In the context of COVID-19, global energy
curse and forced a reassessment of the
investments are expected to decline by 20%
risk posed by ‘stranded assets’ in the
in 2020, although, several clean energy
form of petroleum reserves. The shock is
technologies have shown encouraging
particularly strong in oil-exporting countries,
signs of resilience. However, a number of
most of which were already experiencing
uncertainties remain over the achievement
economic recessions following the 2014
of long-term climate and energy goals
oil price collapse. The impacts in Angola
in the current turmoil. Leadership by
and Nigeria, where energy products
governments, businesses and other
respectively account for 88% and 76% of
decision-makers will play a central role
export revenues, are particularly severe.
in setting the pace of renewable energy
Cash flow cuts due to COVID-19 have deployment to put Africa’s economic
also pushed many energy supply recovery on a more sustainable path.
companies into deep trouble.
There is a large and variable gap
for sustainable energy infrastructure
MEDIUM-TERM
financing in Africa. In 2018, Africa
Changing the investment mindset received a total of $43.8bn in financing
Energy transition in Africa requires investment for energy infrastructure. However, that
funds to keep pace with sustainable high value does not reflect trends over
infrastructure needs. Yet, there is a large the last five years, where investment in
shortfall in finance for investment which the sector averaged just $26.3bn.
severely limits the scale and speed of energy
STATE OF PLAY 13Improving the grid According to a 2017 report from the African
In many countries, a single utility is Development Bank, energy bottlenecks and
responsible for the supply, transmission power shortages cost Africa an estimated
and distribution of electrical power. Low 2% to 4% of GDP per year. Companies in
levels of efficiency and political interference, Tanzania and Ghana, for instance, report
leave utilities struggling to adapt to rapidly a loss of nearly 15% of their sales value
changing circumstances and expectations. due to power outages. In South Africa
too, economic growth has often been
To improve the grid, four main regional
compromised by limited electricity supply.
power pools have been set up – the
Eastern African Power Pool (EAPP), the West
LONG-TERM
African Power Pool (WAPP), the Southern
African Power Pool (SAPP) and the Central Diversifying the energy mix
African Power Pool (CAPP). Their objective Africa’s energy mix needs more
is to secure power supplies and foster diversification. Its total final energy
power system connectivity within the wider consumption (TFC) is still dominated by
region. However, physical interconnections biomass fuels and waste, followed by
through the construction of cross-border petroleum products. Hydrogen has the
lines have been slow to develop. potential to unleash a great increase in
low-carbon energy, if the technology can be
The grid infrastructure in much of Sub-
made cheaper and more readily available.
Saharan Africa is poorly developed, leaving a
large proportion of the continent in the dark. Reliance on biomass for cooking and heating
The high cost of extending the grid away leads to negative repercussions on human
from dense urban areas is one reason. While health due to in-house pollution and on the
grid electricity is cost-competitive in large environment through smoke and loss of forest
urban centres, extending it to remote areas cover. In addition, over-dependence on fossil
requires costly infrastructure investments. fuels, especially oil, exposes the continent
This can lead to high electricity tariffs, which to price volatility. Importing countries risk
deter poor rural households from connecting. sudden oil price spikes which jeopardise
their balance of payments, while price drops
Reliability of electricity
put exporting countries in great difficulty.
Reliability of electricity is another
Major exporters like Nigeria and Angola saw
challenge. A number of sub-Saharan
revenues plummet during the 2014 crisis
countries suffer from frequent power
and again in 2020 due to the pandemic.
outages, leading to losses in economic
growth, job creation and investment. Impacts of climate change
Many companies have to invest in diesel on the energy sector
generators to ensure continuous supply. The impact of climate change on the energy
sector in Africa is significant and likely
Power shortages are a particular problem
to increase. Climate change is bringing
for Nigeria, where the duration of electricity
rising risks to hydro-power generation
outages in 2018 averaged 4,600 hours,
which accounts for up to 90% of national
the highest in Africa. This is largely
electricity generation across Africa. Extreme
due to aging infrastructure, inadequate
weather events, such as droughts and
transmission capacity and constraints
floods, will occur with greater frequency
associated with most of the network.
and intensity, increasing variability in
generation from hydro-electric plants.
14 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020CASE
STUDIES
1. NOOR PROJECT, MOROCCO
• What: The NOOR project is a national MASEN was created in 2010 as a means to
programme for the development implement the energy strategy and manage
of solar electric power with a total renewable energy through the development
installed capacity of 700MW of solar, hydro and wind programmes. NOOR
Ouarzazate I was financed by a consortium
• Where and when: Morocco / 2016-present
with an investment of approximately
• Partners: The Moroccan Agency for MAD 7bn, equivalent to $760mn.
Sustainable Energy (MASEN), a public
limited company, manages Morocco’s THE OUTCOME
renewable energy. The first stage of the
MASEN has so far developed its projects
project (NOOR Ouarzazate I) was financed
through long-term Public Private Partnership
by a consortium comprising the EU, World
(PPP) schemes based on the Independent
Bank, European Investment Bank, African
Power Producer (IPP) model. This institutional
Development Bank (AfDB), Kreditanstalt für
setup structures the relationship between
Wiederaufbau (Germany) and the Agence
MASEN, the Office National de l’Electricité
Française de Développement (AFD).
et de l’Eau Potable (ONEE – Morocco’s
power and water utility) and the developer.
THE NEED
Using the IPP model allows for an optimised
Morocco is the only North African country risk allocation, while minimising the price
without its own oil resources and has been per kWh. An international call for tenders
the largest energy importer in the region. It was used to select a developer capable
has to meet growing local energy demand of building a power plant to the highest
while keeping import bills under control. international standards at competitive prices.
Other criteria taken into account included
In order to overcome its dependence
technical expertise and financial strength.
on fossil fuels, Morocco developed
a National Energy Strategy in 2009, The electricity from NOOR Ouarzazate
which set targets of 42% of installed goes directly into the national grid and
capacity to be obtained from renewable serves up to 1mn Moroccan households.
energy by 2020 and 52% by 2030.
NOOR Ouarzazate I has also made
considerable environmental and social
gains, by preventing the emission of
almost 280,000 tCO2/year, making a major
contribution to Morocco’s greenhouse
gas emission reduction targets, while
creating jobs for the local workforce.
CASE STUDIES 15Subsequent phases of the NOOR Project renewable energy projects in Morocco, while
have been carried out: Noor Ouarzazate also allowing for the supply and export of
II, with a capacity of 200MW, and Noor the electricity produced to both the local
Ouarzazate III, with a capacity of 150MW, market and other countries; and (iii) law 54-14,
both use concentrating solar power which allows self-producers with a global
(CSP) technology and were connected capacity of more than 300MW to access
to the national grid in 2018. Three other the national grid and sell surplus production
plants, NOOR Ouarzazate IV (72MW), exclusively to the national utility ONEE.
NOOR Laâyoune I (85MW) and NOOR
Morocco has also established a number of
Boujdour I (20MW), using photovoltaic (PV)
public agencies and institutions, to better
technology were also connected in 2018.
organise and structure the promotion
of renewable energy development.
WHY IT MATTERS
These include MASEN, the Moroccan
The success of the NOOR Project has been Agency for Energy Efficiency (AMEE),
enabled by a favourable, comprehensive the Energy Investment Company (SIE)
legal, institutional and regulatory framework and the Research Institute for Solar
set by Morocco’s energy strategy. This Energy and New Energy (IRESEN).
includes: (i) law 16-08 on self-production,
The Noor Ouarzazate project is a national
which raised the self-production threshold
initiative that has been scaled up over time.
from 10MW to 50MW; (ii) law 13-09 on
It could be replicated elsewhere in Africa as
renewable energies, which provides a
the continent’s huge solar potential is tapped.
legal framework for the development of
2. M-KOPA, KENYA
• What: A solar energy company offering Strategy (KNES) adopted in 2018. It was
pay-as-you-go products and solutions also helped by the development of a
mature mobile payment infrastructure,
• Where and when: Kenya / 2011 - present
which opened the path to digitalisation
• Partners: M-KOPA in the electricity sector. By enabling the
emergence of innovative business models
THE NEED and payment mechanisms, this has been
key to the development of off-grid initiatives
In recent years, Kenya has been one of the
such as Solar Home Systems (SHS).
best performing countries in sub-Saharan
Africa in terms of access to electricity.
THE OUTCOME
According to the IEA, its access rate reached
85% in 2019, up from 20% in 2013. This M-KOPA operates under a pay-as-you-go
performance reflects increased efforts made (PAYG) scheme. Customers make an initial
by the national government notably through deposit of approximately $33.50, then pay
the Last Mile Connectivity project. Progress daily instalments of $0.48 via a Mobile
is also attributable to the development of Money Service (M-PESA) until the balance
decentralised power generation systems is paid. Clients can pay in daily, weekly or
that benefited from government support monthly instalments, which allows them to
through the Kenya National Electrification adapt payments to income. On repayment,
16 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020the customer becomes owner of the device. provided by local network providers which
M-KOPA Solar’s main selling point are the are necessary for these technologies to
tiny daily repayments that are less than the function; and network reliability for remote
daily cost of kerosene. Moreover, M-KOPA monitoring and mobile payment applications.
also provides information on consumer
behaviour, which helps the business to grow. WHY IT MATTERS
Initially, the project was piloted with grants
This example illustrates a successful
that enabled M-KOPA to prove the viability of
decentralised approach to electricity access,
its concept and expand its business model.
as well as the role of digitalisation and
The success of PAYG SHS solutions, like innovative financing methods in providing
M-KOPA, in Kenya is down to several cheaper electricity to rural households.
factors: the high cost of electricity from The design of a PAYG model allows
the main grid and the poor grid network; communication between consumers,
the global decline in solar photovoltaic the payment platform and the electricity
prices, technological advances and market supplier. Specifically, the model uses Global
innovations; and especially the high rate of System for Mobile (GSM) or Machine-to-
mobile money adoption and digitalisation Machine (M2M) technologies in conjunction
which stimulated the deployment of mobile with mobile money software platforms
payment technology. That enabled solar to remotely monitor solar equipment
service providers to remotely collect and digitalise the payment process.
revenue from customers, reducing the
Economic benefits include new employment
operating costs and financial losses
opportunities and improved productivity
associated with collecting cash payments.
through extended work hours. The
Despite success in Kenya and elsewhere in electricity delivered generates other social
East Africa, PAYG SHSs companies face a benefits, such as improved education
series of challenges related to distribution thanks to extended study time, as well as
and access to technical support. Poor improved health, safety and security.
digital literacy among potential customers
M-KOPA was able to scale-up its project
is another drawback, particularly in areas
and raise equity from impact venture capital
where mobile phone penetration is still low.
firms. The project was transformed from a
Moreover, the development of Internet of
pilot into a commercial venture. Recently, the
Things (IoT) solutions by PAYG companies
company has invested in R&D of products
can be a lengthy process and may not be
and services while raising capital to support
viable for many small and medium-sized
expansion through debt financing.
solar energy companies. Other challenges
include the cost of data and services
CASE STUDIES 173. ESKOM, SOUTH AFRICA
• What: Originally established as the THE OUTCOME
Electricity Supply Commission, this state-
Eskom has remained highly sensitive to
owned company is responsible for the
the interests of mines and large companies
generation, transmission and distribution of
because of its central mandate as an ‘engine
electricity to industrial, mining, commercial,
of economic development’. It continues
agricultural and residential customers
to invest in large-scale, centralised power
• Where and when: South generation. The politicisation of Eskom’s
Africa / 1923 - present business, along with governance and
operational misdemeanours over the past
• Partners: Eskom Holdings Limited (Eskom)
decade has resulted in several challenges.
They include poor management and state
THE NEED
capture which have led to political rather than
Eskom has a near monopoly in electricity economic factors influencing investment,
generation and transmission in South Africa. procurement and pricing decisions.
It has experienced significant changes since
The government has recently announced
its creation in 1923: the utility has undergone
its decision to unbundle Eskom. The
“periods of almost complete autonomy,
plan provides for the creation of
increased regulation, an oversupply
generation, transmission and distribution
crisis, continuous power outages and
subsidiaries, rather than complete legal
massive increases in electricity prices”.
and structural separation. Given the scale
In 2017, Eskom generated about 95% of of the electricity crisis in the country
South Africa’s electricity and about 45% and the extent of mismanagement and
of all electricity on the African continent. corruption, analysts believe the plan is
Although its dominance in distribution is less insufficient to disrupt company culture and
pronounced, it still supplies about 58% of entrenched management practices.
electricity to final customers. The remaining
Regarding decarbonisation, even though
42% is provided by municipal authorities.
Eskom has a renewable energy supply
About 90% of the electricity generated in programme in place, it has recently
South Africa comes from coal-fired power stonewalled on this front, refusing to sign
plants. Since the early 2000s South Africa agreements and claiming that renewable
has implemented a successful but modest energy is too expensive. With solar PV and
renewable energy supply program: 2.2GW wind now significantly cheaper than new coal-
of renewable capacity has been built, fired power plants in South Africa, Eskom may
drawing more than $14bn in investment have other unspoken reasons for blocking
(Buckley, 2017). Eskom also operates the development of renewables. One reason
Africa’s only nuclear power plant, Koeberg, for the utility’s resistance is that Eskom is
located near the main load centre in committed to a major expansion of coal-fired
Cape Town (Greenpeace Africa, 2012). generation in the face of the decline of the
South African electricity market. The company
is building two huge coal-fired power stations,
Kusile and Medupi, each with a capacity of
4.8GW, at an estimated total cost of $34bn.
18 SUSTAINABLE ENERGY SCOPING REPORT | DECEMBER 2020WHY IT MATTERS tariffs, if the government permits, and it could
solve its overcapacity problem by closing old
Eskom’s growing overcapacity and its failure
power stations in favour of expensive new
to grasp the role of renewable energy in the
plants. Such measures would undermine
new economy places the utility at serious
Eskom’s claims that coal-fired electricity is
financial risk. Its hugely expensive new coal
the affordable alternative in South Africa.
plants must be paid for, regardless of how
much electricity the utility can sell. The rise More recently, South Africa decided
of rooftop solar is creating additional trouble to allow municipalities to source
for Eskom. This stands to grow by 8GW of their own power rather than buying
capacity over the next decade, further eroding electricity solely from Eskom.
the utility’s sales. Eskom could raise electricity
4. SILESIA REGION, POLAND
• What: Preparing the phasing-out of Financing this regional modernisation
coal production in an active coal- requires national legal changes. Private
mining region in line with EU energy resources should be mobilised and
and climate policy decisions combined with public funds at regional,
national and EU level. Combining regulatory
• Where and when: Poland / 2017 - present
changes with public financial support
• Partners: Region of Silesia and should enable Silesia to develop a more
the European Commission competitive economy and improve life
quality for citizens, while limiting social costs
THE NEED associated with this type of restructuring.
One of the biggest challenges facing the
THE OUTCOME
Silesia region in Central Europe has been
the need to restructure its reliance on coal In December 2017, the European
production and use. This requires not only Commission launched the Platform on
changing the economic profile of the area, Coal Regions in Transition. It aims to
but also the replacement of traditional promote multi-stakeholder dialogue
economic sectors through a long-term and help coal-mining regions identify,
innovation and modernisation plan. develop and implement projects to
kick-start economic and technological
Restructuring traditional sectors must be
transformation. Silesia is committed to the
accompanied by: the development of new
initiative and has actively taken part.
economic activities; negative impacts of
mining addressed; and human and social A programme adopted in 2018 outlines
capital developed to improve quality of how to create conditions that support
life. Cooperation is needed between transformation of the Polish bituminous
scientific institutions and companies coal mining sector and make it profitable,
focused on R&D to stop the ‘brain drain’ efficient and modern. Elements include
of young people from the region and plans for a database of employee
improve the quality of public spaces. competences, employment activation
and professional adaptation.
CASE STUDIES 19You can also read
