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Electrifying Africa Contents September 2018: ISSUE 115 Oxford Energy Forum 114 looked at liberalization and decarbonization of Electrifying Africa Rural electrification: the potential and limitations of solar power 37 electricity systems around the world, Anna Aevarsdottir, Nicholas Barton and especially outside the OECD Tessa Bold (Organisation for Economic Co- Contents Does solving energy poverty help solve operation and Development). poverty? 39 Introduction 1 Previously, Forum 104 had studied the Catherine Wolfram, Ken Lee and David Robinson challenges facing the electricity sector Edward Miguel in OECD countries, with a focus on Financing system challenges for energy The politics of renewable energy in transformation in Africa 6 Europe. Regardless of their East Africa 41 Laurence Harris circumstances, virtually all countries Emma Gordon are undergoing a fundamental Electrification in Africa: the need for new forms of cooperation 12 Aid and the design and implementation transformation of the sector, involving a Lapo Pistelli of power sector reform projects in sub- significant increase in the role of Saharan Africa 46 renewable energy, greater Natural gas in Nigeria and Tanzania: can Neil McCulloch, Esméralda Sindou and decentralization of energy resources, it turn on lights? 14 John Ward Rahmatallah Poudineh and Tade and the adoption of new ‘smart’ digital Oyewunmi Electrification in sub-Saharan Africa: technologies. This transformation the role of international institutions 49 creates opportunities for expanded New enablers for achieving sustainable Simone Tagliapietra energy for all in Africa 20 consumer access and participation, as Carlo Papa and Giuseppe Montesano well as for decarbonization of energy. Opportunities and challenges in However, it also requires new policies, achieving universal electricity access in markets, and regulations, as well as sub-Saharan Africa 22 new approaches to investment, Anteneh G. Dagnachew, Paul L. Lucas, operations, industry structure, and Andries F. Hof and Detlef P. van Vuuren business models. Sustainable electrification in Africa 27 Gregor Schwerhoff This issue of the Forum focuses on the electrification of Africa, especially sub- Electrification planning with a focus on human factors 30 Saharan Africa (SSA). Due to Roxanne Rahnama and Ignacio Pérez- significant expected population growth, Arriaga the number of Africans without Access to sustainable electricity access in 2030 may not fall electricity in Mali 34 much from today’s level of about 600 Maryse Labriet million, which is about 60 per cent of the world’s current population without September 2018: ISSUE 115 – Electrifying Africa access to electricity. The articles cover is potential to ‘leapfrog’ carbon- electricity access to over 180 a wide variety of countries and issues, intensive generation, especially in million people by 2030. Emma focusing on barriers to meeting isolated rural areas. Anna Gordon explains that the Ethiopian electrification objectives and ways to Aevarsdottir and colleagues argue government has traditionally that even low levels of renewable encouraged large-scale projects overcome them. Here are some of the electrification, especially solar connected to the central grid, while general themes. lamps, can bring substantial the Kenyan government has The rationale for electrification. economic and noneconomic promoted innovation by private Electrification is expected to benefits. Other authors, including operators in decentralized contribute to meeting many of the Lapo Pistelli as well as systems. However, even in those UN’s Sustainable Development Rahmatallah Poudineh and Tade two countries, integrating Goals by 2030, including ending Oyewunmi, emphasize the centralized and decentralized poverty, ensuring quality potential for natural gas to play a systems is becoming important. education, and ensuring access to key role in meeting Africa’s energy energy, while promoting economic needs. Consumer preferences and local growth, gender equality and other participation in rural electrification. goals. However, many authors The role of China. China plays an Most of SSA’s unconnected introduce important qualifications. important and controversial role in consumers are in rural areas. Gregor Schwerhoff argues that the electrification of Africa. Emma Roxanne Rahnama and Ignacio electrification could undermine Gordon credits the good Ethiopian Pérez Arriaga argue that other development goals, including track record in completing successful electrification of rural access to clean energy and climate infrastructure projects in part to the populations requires consumer- action, if it is carbon-intensive. government’s partnership with centric planning and business Catherine Wolfram and colleagues China. Laurence Harris notes that, models. Maryse Labriet agrees argue that electrification may not for SSA, China is the largest and emphasizes the importance of be as important as other policy national source of investment in a strong enabling environment, a issues (such as health) and may the electricity sector’s expansion solid supply of products and not contribute much to achieving and upgrading. Simone services, and a robust demand for the Sustainable Development Tagliapietra points out that Africa is these products and services. Anna Goals. Roxanne Rahnama and part of China’s ‘One Belt, One Aevarsdottir and colleagues Ignacio Pérez Arriaga maintain that Road’ initiative and that China has emphasize the limits to effective electrification requires an focused on coal and large electrification and the need for new understanding of ability to pay, the hydropower projects. He says that financing mechanisms. value of unserved energy, and how China seems not to consider the consumers value different environmental and social issues The role of institutions, policies, attributes of electricity service. that prevent most international and regulatory frameworks. Emma Maryse Labriet stresses that financing institutions from Gordon explains how politics energy access must be measured supporting coal. influences the process of in quantitative and qualitative electrification, contrasting the terms, and to be meaningful must Decentralized and centralized political support in Kenya for be accompanied by clean cooking systems. A number of authors, private enterprise with the facilities. Anna Aevarsdottir and including Laurence Harris and Ethiopian preference for colleagues emphasize the need for Carlo Papa and Giuseppe government control. She also new financing mechanisms to Montesano, argue that both the notes the political risks in Kenya make electrification a reality. declining cost of renewable power related to corruption, ethnic and the adoption of smart conflict, and political instability. Neil The generation mix. Coal is technologies support the McCulloch and colleagues stress currently an important part of the development of decentralized rural the importance of taking local SSA generation mix and electricity systems and their political context into account when investment in new coal-fired plants connection to central grids. deciding on aid policy. continues. The authors recognize Anteneh Dagnachew and Rahmatallah Poudineh and Tade that renewable power will play an colleagues maintain that on-grid Oyewunmi illustrate the need to increasingly important role in electricity would be cost-effective improve legal and institutional African electricity, whether at large in most cases, but renewable mini- frameworks, introduce independent scale or in isolated systems. There grid technologies could provide regulation, and liberalize the OXFORD ENERGY FORUM 2 September 2018: ISSUE 115 – Electrifying Africa electricity sector in order to support perspective on the challenges of centralized systems (where new investment and improve operating electrifying Africa and identifies financial instruments and institutions efficiency. proposals for addressing them. The can increase investor return–risk second looks at system-wide issues ratios), and how it differs for investment New financial architectures. Many related to expanding output and supply in decentralized clean electricity of the articles propose ways to security, including the potential for systems. finance the enormous investment large-scale generation projects and the Increasing the output and reliability requirements, with de-risking of integration of national and local grids. of integrated systems private investment being a The third focuses on rural common theme. Laurence Harris electrification, especially from the Lapo Pistelli argues that the African proposes a financing systems perspective of consumers. The final continent has huge renewable energy framework that looks at the entire part explores perhaps the most difficult potential and abundant natural gas that process from financial source to challenge, namely how to finance the together can deliver stable and implementation. Lapo Pistelli enormous investment requirements to environmentally sustainable electricity identifies various credit guarantee achieve universal electricity access in generation. The author refers to the proposals. Rahmatallah Poudineh Africa. untapped potential of natural gas and and Tade Oyewunmi recommend cites evidence that new (fossil-fuel- improvements for institutions, An overview of the electrification of fired) power projects in Africa burn coal policies, and regulation. Carlo Africa and even diesel, not natural gas. After reviewing reasons for the lack of Papa and Giuseppe Montesano Laurence Harris identifies
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