Shots in the dark: vaccine rollout highlights Africa’s energy gap
As African countries scramble to acquire and roll out vaccines, the urgent need for reliable energy supply is once again in the spotlight.
Health officials say at least two thirds of Africa’s 1.3-billion people will need to be vaccinated against Covid-19 if the continent is to achieve herd immunity. Meeting this target will be difficult, not least because of the lack of reliable power supply.
Most of the Covid-19 vaccines require stable ultra-low (-70°C to -5°C) to low (2°C to 8°C) temperatures to maintain their viability. The lack of energy security across the continent is consequently slowing down the vaccine rollout, which could lead to more deaths and slower economic recovery.
Even in African countries where the relevant equipment is available, power and personnel may not be, Reuters has reported. In nations as different as Nigeria, South Sudan and Zambia, electricity supply is extremely unreliable and most of the population remain disconnected from the national grid.
Many hospitals consequently depend on diesel-powered generators, but often can’t afford refuelling and maintenance — putting patients requiring life-saving machines such as ventilators in danger. A 2014 World Health Organization study found that only about 28% of health facilities and 34% of hospitals on the continent had access to reliable electricity. This is unsustainable.
The African Development Bank has previously highlighted that just one person in five has access to electricity in sub-Saharan Africa. Yet sector and regulatory reforms that could unlock investment remain painfully slow and mired in bureaucracy. Unless we move faster, the bank points out, only about 40% of the countries on the continent will achieve universal access to electricity by 2050.
Without urgent measures to address the huge power gap across sub-Saharan Africa the continent will struggle to not only contain Covid-19 and future pandemics, but also maintain sustainable economic growth. Even SA, Africa’s most industrialised economy with an electrification rate close to 90%, is being hammered by increasingly frequent and severe bouts of load-shedding, disrupting the country’s post-Covid economic recovery prospects. Accelerating investment in cost-competitive and employment-creating renewables will be key here.
The SA government’s Integrated Resource Plan (IRP) indicates that the country needs 26,000MW of new solar and wind capacity by 2030 to keep the lights on. It is thus imperative that the department of mineral resources & energy immediately implements the following measures announced by the president during the state of the nation address:
- Identify the preferred bidders from the delayed risk mitigation independent power producer (IPP) procurement programme.
- Launch the long-awaited fifth bidding window for the renewable energy IPP procurement programme.
- Implement the simple regulatory reforms that would unblock the considerable distributed energy generation project pipeline.
Whether Africa can reach its potential and compete globally will largely depend on how it positions itself to take advantage of the rapid shift to cheap renewable energy that is under way in the rest of the world.
But the energy needs of the continent — green or otherwise — require huge funding commitments. Previous estimates highlight that the cost of closing the energy access gap in sub-Saharan Africa could be about $41bn a year, or about 6% of the region’s GDP. SA alone needs to invest R1-trillion in the next decade to restore energy security. Most of this funding will need to come from the private sector as public finances are already stretched and are now being diverted to deal with the pandemic and its effects.
Project finance plays a key role in financing private power projects, especially in emerging economies. These financing deals usually involve several investors (shareholders/equity investors, banks, pension funds and development finance institutions) that are paid back from the cash flows generated by the project.
This approach is able to ease investment risk and raise finance at a fairly low cost, to the benefit of investors and consumers alike. To reap the benefits of power project financing, the continent needs energy professionals who are well versed in the fundamentals of power project finance, contracts and risk mitigation.
Africa has many of the ingredients to be an economic powerhouse, especially with the recently concluded African Continental Free-Trade Area Agreement now operational. But without reliable power supply the continent will be unable to realise its full potential.
We have a way to go, and the disruption caused by the Covid-19 pandemic can be an opportunity to urgently increase energy security by accelerating power sector investment. It is literally a life-or-death matter.
• Kruger, a PhD candidate, is research fellow and course convener at the University of Cape Town Graduate School of Business Power Futures Lab.
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