Electricity in Africa: Quantity and Quality
Infrastructure investment is currently a key driver behind the commendable GDP growth rates observed in numerous African countries, and investments in energy generation will hold a particularly symbolic position in these development strategies. Due to undeveloped private sectors and the political capital that is gained through providing such a perceivable service, governments have been willing to bear the investment, financial and operational risks involved in such large projects – albeit under significant capacity constraints. Electricity is crucial in most production processes, and the inability to access a reliable energy source deters foreign investment and limits the development of domestic economic activities.
However, the African continent lacks adequate energy infrastructure, and severely underperforms in the provision of power in a global context. Furthermore, actual energy production figures for sub-Saharan Africa are likely to be substantially lower than the theoretical capacity due to inadequate maintenance, outmoded equipment, fuel shortages, as well as general inefficiencies. According to the International Renewable Energy Agency (IRENA), Africa currently has 147 GW of installed capacity, a level comparable to the capacity that China installs in one to two years. In addition, average per capita electricity consumption in subSaharan Africa (when excluding South Africa) is just 153 kWh/year, which is roughly 6% that of the global average. Furthermore, IRENA notes that the continent will need to add around 250 GW of capacity between now and 2030 to meet growing demand. This implies that capacity additions will have to roughly double to around seven GW annually. This substantial investment requirement has resulted in many countries increasing scope for private sector participation in energy provision.
However, openness to private energy provision differs significantly between countries, while other idiosyncratic factors also affect the attractiveness of entering these energy markets. Lack of policy coordination between government departments or between departments and agencies can hinder the implementation of energy projects. Due to the magnitude of investment required, any policy shifts that even delay the implementation of these projects can be very costly to private sector participants. Africa’s electricity generation has steadily increased, rising by 48% between 2002 and 2012 to reach just over 680 billion kWh in 2012. In turn, electricity consumption has shown a similar rise, increasing by 47% over the period to reach 600 billion kWh. The gap between generation and consumption, equivalent to nearly 12% of total generation, is an indication of wastages due to inefficient distribution and a general lack of supply quality.
More specifically, sub-Saharan Africa notably underperforms when considering the general quality of electricity supply, according to the most recent World Economic Forum (WEF) figures. While the quality differential between sub-Saharan Africa and the global average has decreased over the past decade, the region continues to perform poorly in this regard. It should also be noted that a substantial amount of energy produced in most African countries is either directly produced by or directed towards large commercial enterprises in extractive industries. This means that the actual electricity that is consumed by the general population is significantly lower than the continent’s actual generation figures. In addition, the inadequate transmission and distribution networks only allow electrification in urban centres, and most of the land-area, and in some cases most of the population, has no access to electricity.
The above is an excerpt from our Latest Power Sector in Africa Report. Please feel free to download.