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A Sustainable Power Sector in East and Horn of Africa – The Potential Role of Renewables - Regional Report

By

Stephen Karekezi, John Kimani and Jared Atiang


EXECUTIVE SUMMARY

There is a large potential for renewable energy technologies development in East and Horn of Africa. Despite this potential, the contribution of renewables to the region’s power sector is still minimal. Most power utilities cannot cope with the growing demand for electric power in the region. In addition, the power utilities that heavily rely on conventional energy sources such as fossil fuel and large hydro face high risks due to escalating and unpredictable oil prices and drought respectively.

Consumption of modern forms of energy in East and Horn of Africa is very low compared to other regions such as Southern and Northern Africa. This has been an impediment to economic growth in the region since modern energy services are essential for the development of productive activities that raise the incomes of the poor, for basic health and educational needs, for water supply systems and progress on other aspects of development. Renewables could play an important role in creating a more sustainable power sector.

This study assesses the contribution that renewables could make towards fostering a more sustainable power sector in East and Horn of Africa. Specifically, the study reviews the energy status in East and Horn of Africa and examines the role that renewables can play in the power sector of the region and concludes by proposing key policy strategies that could motivate development of renewables. The main technologies assessed include, biomass-based cogeneration, geothermal, small hydropower, solar water heaters and to a small extent, bio-fuels. The study employed desk review of available relevant secondary sources as well as a limited set of sample surveys in selected areas.

Gains that accrue from renewables are enormous. First, renewables could improve the risk profile of the power sector in the region by mitigating ongoing oil price increases and drought crisis. High oil imports increase the vulnerability of the countries to external oil price shocks which have an adverse impact on balance of payments while drought has adversely affected hydropower supply in the region leading to massive load shedding. Second, there is potential for jobs and enterprise creation through renewables as the technologies are far less sophisticated than conventional energy technologies. While chances of an African country (with the exception of South Africa) becoming a significant player in the world's conventional energy equipment supply and services market are slim, with financial support combined with astute strategic technological initiatives, it may be possible for a country within the region to become a significant player in the small and medium-scale renewables equipment and services market.

Thirdly, there is growing need to enhance competitiveness of agricultural commodities, which are the main stay of economies in the region. Agro-processing industries such as coffee, tea, sugar, sisal and cotton are located in remote areas (sometimes away from the grid); embedded renewable-based generation can lower their energy costs thereby enhancing the competitiveness of their products in the world market. Embedded generation can also contribute to the electric system stability by providing generation inputs at the extreme ends of the grid where agro-industries are located.

Lastly, increased concerns over the local, regional and global environmental impacts of conventional energy systems is another reason for the region to promote renewables. There is also a growing volume of grant resources such as Global Environment Facility (GEF) and Clean Development Mechanism (CDM) available for appropriate renewable energy systems in Africa that countries in the region could take advantage of. While Africa’s contribution to greenhouse gases is negligible, widespread use of renewable energy for electricity generation does not only contribute to protecting the global environment but also delivers significant local and regional environmental benefits.

The study suggests a number of policy options that could enhance rapid development of renewables in the region. These include, among others:

  • Expanding the mandate of Rural Electrification Agency to include renewables.
  • Issuing licenses and Power Purchase Agreements (PPAs) for renewable-based power generation options covering a longer period of time.
  • Offering attractive feed-in tariffs to motivate private power developers to invest in renewable-based power generation.
  • Regulatory agencies should set specific targets as well as provide preferential tariffs for electricity from renewables that reflect their lower risk profile.
  • Least cost power plans should take into account the risks and transmission costs which are inherent in large scale conventional energy sources thus establishing a more even basis for comparison with renewable-based power generation option.
  • Mobilizing local capital investment for renewable-based power generation through policy incentives such as tax holidays.



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