Low-Cost Solar Power Presents a Transformative Opportunity for Africa
Originally Published in the December 2019 Journal, Breaking the Silence, Pg. 1
Energy consumption in Africa’s lower income markets is predicted to rise tremendously throughout the coming decades. Birthrates are projected to pull Africa’s population from 1.2 billion up to over 2 billion by 2050. The majority of this growth will occur in communities which have historically been disconnected or have had inconsistent servicing from national grids. If electricity access for these populations is to ever rise above 35 percent, policy makers and businesses must address questions of future energy systems. Past energy infrastructure has proven unreliable, expensive, and difficult to maintain. South Africa, for example, has had to cancel construction on future power plants due to high costs, and countries such as Rwanda and Zambia will be faced with similar costs, as they create unsustainable energy deals with Russia. Fortunately, there is an alternative. Harnessing solar energy seems to provide an economically feasible, grass-roots method for electrifying Africa
Most immediately, there are clear geographic benefits for photovoltaic systems in this region. Africa receives many more hours of sunlight than any other continent. In parts of Egypt, Sudan, Chad, and Libya, the sun shines for 4,300 hours per year, 97 percent of the possible total. Much of the continent is also in the intertropical zone where the intensity of sunlight is always high. Additionally, two fifths of the continent is desert, the most continuously sunny biome. The combination of these factors account for the projection that Africa’s sun exposure could provide 40 percent of the global total. Choosing to ignore Africa’s massive solar reserves is not only environmentally harmful, it is also allocatively inefficient.
The other clear benefit of solar technology is that it does not require a centralized grid. Financially precarious governments have fallen short when providing energy infrastructure in countries such as Burundi, Chad, and Malawi (where energy access has not breached 15 percent of the total population). Dependent upon location and income, people may experience blackouts of 50 to 4,600 hours annually. Some governments have also been slow to implement new projects due to high levels of bureaucracy and corruption such as those in Kenya and Nigeria. Luckily, solar panels can be constructed at a single unit level and can circumvent the need for government involvement.
The largest case of private energy expansion into less-wealthy communities is through a start-up called M-KOPA. M-KOPA is the Kenyan-based pioneer of small-scale off-grid solar power. They provide access to solar energy for as little as $1 USD a month via a system of payments. After 24 payments, the user has paid the full cost of the kit, and they receive full
ownership of the product. M-KOPA allows for a mobile payment system and creates a cleaner, cheaper alternative to fossil fuel powered generators. Analysts predict that M-KOPA may be the first “unicorn” (a privately held startup company valued at over $1 billion USD) to be serving exclusively African markets. Their success led to a range of competitors such as Fenix, Zola Electric, and Power OffGrid, all of which bring electricity to isolated communities through a similar business model. The benefits have been clear: 58 percent of households connected to off- grid technology undertake more economic activity because of their home solar systems. Children are able to do homework past sundown, cellphones can be charged at home, and adults can use appliances which would otherwise be inconvenient to power.
Financing poses the biggest obstacle to building Africa’s clean energy sector. Estimates of required investments, between 2015 and 2040, stand between $33 billion and $63 billion USD, while current government spending is only about $12 billion USD. Fortunately, business models similar to M-KOPA’s appear to be self-sustaining, and profits are reinvested for further expansion. Additionally, bigger firms and departments have been picking up momentum in the eyes of international investors and governments. China and the European Union have led the charge with a variety of loan packages, while the U.S. has followed closely behind with their $7 billion USD “Power Africa” initiative. Global businesses have also seen an opportunity to close this solar financing gap, with companies such as General Electric, ABB, Alstom, Siemens, and Schneider Electric investing tens of billions of dollars.
Solar power also has the same shortcomings in Africa as it has everywhere else. Researchers must build new ways to store and transport electricity, if the continent wants to commit a larger share of the energy sector to photovoltaics. They also need to be continuously developing new ways to improve the efficiency of panels; the most efficient panel design stands at 33 percent of max efficiency, and the most common design is only at 18 percent. Finally, both the price of producing photovoltaic systems needs to continue to fall, and manufacturing must be streamlined within the continent to avoid market barriers.
The potential for solar energy in Africa is large and relatively untapped. For individual communities, solar technology may have a similar effect as mobile phones, effectively avoiding government-built infrastructure to cater to certain needs. For larger industries, schools, and hospitals, solar energy could cut costs and avoid further losses brought on by blackouts. If policy makers and investors continue to support initiatives in this sector, the social and economic gains will be significant.