Africa's Energy Developments
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AFRICA’S ENERGY DEVELOPMENTS COMPLIMENTARY UPDATES AND INTELLIGENCE BRIEFINGS MAY 2020 1 TABLE OF CONTENTS Africa INSIGHTS P. 03 NEW TECHNOLOGY AND WEAK FOSSIL FUEL INVESTMENT PAVE WAY FOR RENEWABLES AND GREATER INTERCONNECTION OF REGIONAL POWER POOLS Improvements and innovations: progress made in the energy transition ................................ 03 Priorities and opportunities leading up to 2030 ........................................................................... 04 Key considerations ......................................................................................................................... 07 Africa’s top 10 stories P. 08 1. Vodacom, Safaricom partner in purchase of Kenyan fintech brand M-pesa .................. 08 2. Nigeria’s leading bank implements voice operated banking service .............................. 08 3. West Africa embarks on solar power electrification scheme ............................................. 09 4. Bannerman tests nano filtration technique at Etango uranium project ............................. 09 5. Fintech app Chippercash partners with Visa for expansion drive ...................................... 10 6. Nigerian genomics company secures additional funding for scaling research .............. 10 7. Innovation hubs launch in South Africa and Morocco ........................................................ 10 8. Locally manufactured modular chips revolutionising IoT .................................................... 11 9. Iron Capital announces partnership with Australian government ...................................... 11 10. AfDB and Others Pledge US$160 Million to Improve Africa’s Energy Access .................... 11 Other notable stories ...................................................................................................................... 11 Africa INSIGHTS NEW TECHNOLOGY AND WEAK FOSSIL FUEL INVESTMENT PAVE WAY FOR RENEWABLES AND GREATER INTERCONNECTION OF REGIONAL POWER POOLS The trajectory of Africa’s energy developments can broadly be categorised under two main strategies. The first is grid intensification in contributing to the electrification of growing urban centres in covering roughly 45% of Africa’s projected energy needs by the middle of the century. This type of grid intensification has traditionally been buoyed by coal, natural gas and large-scale hydropower, but a confluence of factors, including environmental concerns, are throwing into question the future viability of this model. The second is the fast-tracking and rollout of micro-grids primarily based on renewable sources in stimulating rural electrification - here solar home systems will alleviate pressures on central grids while simultaneously paving the way for sustainable electrification. Though over a hundred coal-fired power plants are scheduled to be built in Africa by 2040, the funding for these may not materialise. Investor interest in coal-fired power has dropped dramatically, and the African Development Bank (AfDB) echoed the sentiment when it announced in June 2019 that it would not be financing any further projects of this type. Natural gas is becoming a preferred baseload power source particularly in Southern Africa, but also in pockets within West Africa like Cote d’Ivoire, Ghana, Nigeria and Senegal. Hydropower is a preferred alternative renewable baseload power source to both coal and gas, however the considerable initial build- investment required, long-lead time to completion, and overt reliance on water availability in what can be water scarce regions, have placed a limit on its future utility. Instead renewable energy installations tapping into wind, solar (both photovoltaic and concentrated solar power) and geothermal energy will play an increasing role going forward. Improvements and innovations: progress made in the energy transition Wind and solar technologies have proved the biggest winners of foreign financing and technical assistance thanks to lower costs, with their use spreading beyond their dominant presence in North and Southern Africa. Once reliant on oil and gas for their energy requirements, North African countries have made strides toward incorporating solar into their energy mixes, initialising a host of plants including the 1.8GW Bembam park in Egypt, the 4.5GW Tunur project in Tunisia, 150MW worth of projects in Algeria, and the 2GW Ouarzazate Noor solar project in Morocco. South Africa gained a boost to its renewables sector when it was announced in early 2020 that regulators would loosen restrictions on independent power producers (IPPs) in allowing additional support to ailing national utility Eskom. 3 AFRICA INSIGHTS The biggest new growth in renewables has emerged from the West and East African regions respectively. ECOWAS nations have seen the renewable portion of their energy mix expand dramatically over the past two years, with five new solar plants built in Senegal since 2018 and similar projects underway in Mali. The AfDB has additionally launched a financial support mechanism for rural electrification projects in Cote d’Ivoire, Guinea and São Tomé and Príncipe. East Africa has seen the proliferation of a variety of renewables including geothermal projects in the Rift Valley, wind farm projects in Ethiopia, Kenya, Tanzania and Uganda, and planned ‘run of river’ hydropower projects across Burundi, Kenya and the DRC. In addition to the shifting focus toward renewables the past two years have seen committed efforts by regional partners to further advance energy trade in and between regional power pools. The Maghreb Electricity Committee (COMELEC) is the continental leader in this regard with Morocco and Tunisia both intending to sell power to European nations via undersea transmission cables. Members of the East African Power Pool (EAPP) have been trading power amongst each other since 2018 following the construction of six major transmission lines between member states. In the same year Tanzania received a US$455 million funding package for the construction of a transmission project which links the EAPP and the Southern African Power Pool (SAPP), while in September 2019 the World Bank helped fund the Malawi-Mozambique interconnector, with additional projects for linkages between the DRC and Zambia also underway. The West African Power Pool (WAPP) will begin trading energy across borders by the end of 2020 through an active IPP market in Ghana and privatised transmission infrastructure in Nigeria. Source: PIDA, Ketraco, ESI-Africa, Prime Investment Limited; 2018-2020 Priorities and opportunities leading up to 2030 Thanks to reductions in cost and newfound ease of scalability the notion of renewables playing an integral role in powering national and regional grids is becoming increasingly palatable to international investors. Development priorities have shifted towards making the energy mix of renewables and non-renewables more efficient and easy to manage, providing a conducive platform for building an efficient and digitised renewable energy grid from the ground up. Opportunities over the coming years are likely to focus on aspects such as better utilising Big 4 AFRICA INSIGHTS Data and the internet of things (IoT), improving battery storage capacity, implementing smart grid development through artificial intelligence (AI), and streamlining the transfer and sale of electricity through blockchain technology. Advancements in battery storage are the key avenue by which renewables have managed to compete with oil, gas and coal for utility scale applications. These instances have been generally confined to developed countries including Japan, Germany, UK, US and other EU member states, however analysts predict that their application will drive growth of at least 45% percent year-on-year in emerging markets between now and 2025. Battery-storage systems including lithium-ion, sodium-ion, sodium sulphur and vanadium redox, can serve as vital components in the interplay between renewables and fossil fuels as they remove inefficiencies and manage output by storing energy during peak production and releasing during peak demand. In smaller contexts they can drive down costs for individual consumers in micro-grid operations through the use of ‘behind-the-meter-systems’. In a grid intensification context they remove inefficiencies by harmonising the intermittent supply of renewable energy with peaking and troughing demand of central grids. Such systems are in demand in countries like Burkina Faso, South Africa and Zimbabwe, where aging centralised grids suffer from frequent failures. In February 2020 the International Finance Corporation signed a deal with the Burkinabe government to begin rolling out such systems before the end of the year. The South African government has similarly adopted the Battery Energy Storage System (BESS) which has already been deployed in small scale at the Sere wind energy facility. Across the border in Zimbabwe, Distributed Power Africa has employed Tesla battery systems in its cell towers and sold units to local firms to mitigate against rolling blackouts. Shepherding a mixed generation and supply of renewable and non-renewable sources to cyclically coincide with demand and generation peaks across national and regional boundaries, will quickly become too complex to do efficiently, and this is where the deployment of AI systems will come to the fore. The development of 5G technology will also allow IoT systems to rapidly analyse and share information about the state and usage of electricity, and when coupled with