Africa needs $40bn investments for stable electricity — Sahara Group MD

African countries will require an average of US$40bn power grid investments annually for about five years to deliver stable electricity to citizens on the continent, Group Managing Director, Sahara Power Group, Kola Adesina, has said.

Speaking on the topic: “The Future of Power in Africa” at the weekend at the Lagos Business School, he said projections indicate an increase in energy demand across Africa in the coming years.

He noted that in 2040, this demand could be around 30 per cent higher than what was obtainable currently, adding that it was vital for all stakeholders to work towards shoring up the continent’s power grids through continuous investments.

“Massive investment in Africa’s grids is critical to improve system reliability, expand access and facilitate the integration of variable renewables,” he stated.

Mr Adesina noted that; “Annual investment in electricity grids should more than triple in the 2026/30 period, compared with 2016/20, reaching US$40bn per year on average. Distribution networks account for over two/thirds of this total.”

Access to electricity

He explained that the projected increase in energy and electricity demand makes access to electricity a quest that Africa must pursue relentlessly. “In 2021, 43 per cent of the population of Africa, around 600 million people, still lacked access to electricity; 590 million of them were in sub Saharan Africa,” he said.

According to Mr Adesina, 90 million people or six per cent of the current total population would need to gain access each year on average from 2022 for every African to have access to electricity by 2030.

“Africa needs to generate 575 terawatt/hours more in 2030 than in 2020 to meet the increase in electricity demand projected, an average rate of growth of five per cent per year,” he added.

Thermal plants

Power experts say most electricity on the continent is currently produced by thermal plants – gas in many coastal areas, including North Africa; coal in South Africa in particular; and older, generally smaller oil fuel plants almost everywhere.

There are also industry projections that the use of drones and digitalisation, including geographic information systems, outage management systems and smart metering is expected to increase among African power players.

Mr Adesina called for market reforms and outlined the priority areas for action to include tariff structure reform, and use of concession agreements granting rights to private operators.

Others include regulatory carveouts for private sector investment and ownership and the introduction of auctions and competitive tenders.

“Reforms to make electricity tariffs cost reflective have been implemented or are under discussion in 24 African countries,” he stated.