Prospects for the African Power Sector

executive summary Electricity has become an indispensable prerequisite for enhancing economic activity and improving human quality of life. Agricultural and industrial production processes are made more efficient through the use of electricity. Households need electricity for many purposes , including cooking, lighting, refrigeration, study and home-based economic activity. Essential facilities, such as hospitals, require electricity for cooling, sterili-sation and refrigeration. Africa currently has 147 GW of installed capacity, a level comparable to the capacity China installs in one or two years. Average per capita electricity consumption in sub-Saharan Africa (excluding South Africa) is just 153 kWh/year. This is one-fourth of the consumption in India and just 6% of the global average. Nearly 600 million people in Africa lack access to electricity. Electricity blackouts occur on a daily basis in many African countries. Faced with this situation, people and enterprises often have to rely on expensive diesel power generation to meet their electricity needs, costing some African economies between 1% and 5% of GDP annually. To meet its growing demand Africa has an urgent need to raise the level of investment in its power sector. Analysis of a range of country and regional studies suggests the continent will need to add around 250 GW of capacity between now and 2030 to meet demand growth. This will require capacity additions to double to around 7 GW a year in the short-term and to quadruple by 2030. The magnitude of the investments required is such that governments will need public-private partnerships in order to scale up investment in generation capacity. While access rates are improving in some countries, the business environment and policy framework are still not sufficiently robust to attract the level of private investment required to install the additional 250 GW by 2030. Many African countries are burdened by opaque policy frameworks and excessive red tape, while electricity subsidies and government mandated 3 Prospects for the Afr ican Power Sector pricing often hinder sustainable business investment. Renewable power generation technologies alone will not meet Africa's energy challenges. For example the policy framework, manufacturing base, social issues related to energy need to be considered as well. Africa faces a unique opportunity as nearly two-thirds of the additional capacity needed in 2030 has yet to be built. The continent can benefit from the recent global progress and cost reductions in renewable power generation technologies, to leapfrog the development path taken by industrialised countries …