Climate Policy ISSN: 1469-3062 (Print) 1752-7457 (Online) Journal homepage: http://www.tandfonline.com/loi/tcpo20 Developing Africa’s energy mix Gregor Schwerhoff & Mouhamadou Sy To cite this article: Gregor Schwerhoff & Mouhamadou Sy (2018): Developing Africa’s energy mix, Climate Policy, DOI: 10.1080/14693062.2018.1459293 To link to this article: https://doi.org/10.1080/14693062.2018.1459293 Published online: 05 Apr 2018. Submit your article to this journal Article views: 398 View Crossmark data Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=tcpo20 CLIMATE POLICY, 2018 https://doi.org/10.1080/14693062.2018.1459293 SYNTHESIS ARTICLE Developing Africa’s energy mix Gregor Schwerhoffa and Mouhamadou Syb aMercator Research Institute on Global Commons and Climate Change (MCC), Berlin, Germany; bInternational Monetary Fund, Washington, DC, USA ABSTRACT ARTICLE HISTORY Africa is growing rapidly both in terms of population size and economically. It is also Received 22 November 2017 becoming increasingly clear that fossil fuels impose a high price on society through Accepted 27 March 2018 local environmental pollution and Africa’s particular vulnerability to climate change. At the same time, Africa has an excellent renewable energy potential and prices for KEYWORDS Africa; development; energy renewable energy are reaching the price range of fossil fuels. Comparing results mix; sustainability from state-of-the-art Integrated Assessment Models we find different options for achieving a sustainable energy supply in Africa. They have in common, however, JEL CLASSIFICATION that strong economic development is considered compatible with the 2°C climate O13; O44; Q01; Q48 target. Taking both challenges and appropriate solutions into account, some models find that a complete switch to renewable energy in electricity production is possible in the medium term. The continental analysis identifies important synergy effects, in particular the exchange of electricity between neighbouring countries. The optimal energy mix varies considerably between African countries, but there is sufficient renewable energy for each country. The intermittency and higher capital intensity of renewable energy are important challenges, but proven solutions are available for them. In addition, we analyse the political economy of a sustainable energy transition in Africa. Key policy insights . An almost complete shift towards renewable energy (RE) is considered feasible and affordable in Africa. By 2050, electricity generation could be sourced largely from solar, wind and hydro power. Prices for RE in Africa are now within the price range of fossil fuels, partly due to the excellent RE potential. The optimal energy mix varies strongly between countries, but RE is sufficiently available everywhere. Addressing intermittency is possible, but requires investments and cooperation on the grid. 1. Introduction The current energy mix in Africa reflects the energy endowments of the continent, but also the technologies of the past. Although the total amount of energy produced in this way is still insufficient, the energy mix was com- paratively cheap and, until recently, externalities were not considered a major problem. Two recent develop- ments have changed this overall perspective. First, it has become increasingly clear that fossil fuels are leading to climate change and local environmental pollution. These effects in turn are causing significant damage to welfare and, via health impacts and increasing heat, to the productive capacity of Africans. Second, the available technologies have changed significantly. It is thus fortunate for the continent that it is not only endowed with fossil resources, but also with the best renewable energy sources worldwide. Africa CONTACT Gregor Schwerhoff [email protected] Mercator Research Institute on Global Commons and Climate Change (MCC), Torgauer Straße 12-15, 10829 Berlin, Germany © 2018 Informa UK Limited, trading as Taylor & Francis Group 2 G. SCHWERHOFF AND M. SY has the opportunity to combine new technologies with its own resources to achieve an energy mix that will not only allow it to develop rapidly, but also to build this development on a sustainable basis for future generations. Although developing the electricity supply is the responsibility of the individual African governments, some degree of analysis at the continental scale is useful. Important synergies can be realized at the international level, in particular in the development of the electricity grid. Continental aggregates can be used to study the com- patibility of the energy mix with the UN’s Sustainable Development Goals, and with the 2°C target for global warming fixed in the 2015 Paris Agreement. In addition, there are similarities between countries that allow for the transfer of some general insights to the individual country situations. As a first contribution, we present energy mix scenarios for Africa from five highly detailed, well-documented energy-economy models from the peer-reviewed literature (see Figure 1 for a list of these models). The compari- son of these model results shows important similarities and differences between them. All of the models see an Figure 1. Energy mix in Africa. Source: Author’s calculation using the LIMITS database (Kriegler et al., 2013; Tavoni et al. 2013; Jewell et al. 2016). The database is available at https://secure.iiasa.ac.at/web-apps/ene/LIMITSDB/. CLIMATE POLICY 3 opportunity for Africa to rapidly develop its economy with sufficient energy while respecting the 2°C target. The models also expect that a number of different energy sources will be used, because some of these sources are complementary and because the best locations are limited. A very important share will come from renewable sources, mainly solar, wind, hydropower and biomass. While most models consider renewable energy as the main approach to climate change mitigation, others expect carbon capture and storage (CCS) or nuclear energy to be the best option (see Section 2.1). As a second contribution, we investigate the effect of heterogeneity within Africa on the best choices for the energy mix in the individual countries across the continent. While the potential for solar power is very good throughout the continent, wind power and biomass potential are more concentrated, at the coasts and in central Africa, respectively. We conduct case studies of Nigeria, South Africa and Kenya to analyse how local con- ditions and political factors influence the optimal energy mix. As a third contribution we analyse how plans for a reliable energy mix can be implemented on the ground in Africa. We discuss the major challenges for the use of renewable energy: intermittency, the relative cost of renewable and fossil fuels, higher capital intensity and political economy. We then show that a wide range of options for the financing of an improved energy mix can be taken and which policies are the most promising. We also present some of the existing tools to plan the energy mix of a country systematically. This article is related to studies of the energy mix at the global level. These studies address the question whether particular targets for climate mitigation can be reached and to which extent the different technologies can contrib- ute. McCollum et al. (2013) compare the results from several Integrated Assessment models (IAMs). They find that reaching the 2° target requires significant additional investments into low-carbon energy. For Africa, the study finds that the target requires an increase in investments into renewables from 1–3to13–72 billion US$ annually, while it would leave some space for the use of fossil fuels. Recent studies focus on specific technical questions such as the feasibility of climate mitigation with sub-optimal policies (Bertram et al., 2015) and the systematic underestimation of solar power potential in previous studies (Creutzig et al., 2017). Compared to these studies, we focus specifically on Africa and on the policy options for implementing powerful and sustainable energy provision. The Africa Energy Outlook (IEA, 2014) offers a comprehensive analysis of future energy use in Africa. However, the study does not take climate mitigation targets into account, suffers from the previously mentioned under- estimation of solar energy and has a comparatively short time horizon until 2040. Lucas et al. (2015) study the energy system in Africa and focus on aggregate indicators such as total emissions, energy access and fuel exports. Calvin, Pachauri, Cian, and Mouratiadou (2016) consider different drivers of the energy mix in Africa for scenarios with no and moderate (550 ppm) climate policy. Leimbach, Roming, Schultes, and Schwerhoff (2018) study the aggregate cost of climate policy for Africa, finding benefits of mitigation to be of roughly the same size as the cost. In this article we study the energy mix required for fuelling rapid growth within the limits of the Paris Agreement, that is 2°C global warming,1 and combine it with an analysis of the obstacles and policy options to implement it. Today’s decisions also create a future bias towards today’s choices through infrastructure, government insti- tutions and their interaction (Unruh 2000). Given the effects of fossil fuel use on health and the environment, this kind of ‘lock-in’ effect should be considered as an externality of today’s decisions on the decisions of the future. This is important when considering that African governments are currently planning to construct a number of coal power plants (Shearer, Ghio, Myllyvirta, Yu, & Nace, 2017) and how difficult it is for western governments to decarbonize their coal-based energy systems (Spencer et al., 2018). In Section 2 we review the available literature on the future development of the energy mix in the continent of Africa. We then highlight regional variations within Africa and present case studies for Nigeria, South Africa and Kenya in Section 3. In Section 4 we take a closer look at the major challenges for implementing a sustainable energy mix in Africa. We conclude in Section 5.