By Ryan Witton
By the close of the COP26 climate conference late last year, 77 countries and organisations had signed the ‘Global Coal to Clean Power Transition Statement’. In it, signatories pledged to phase out coal power and move away from the carbon-intensive fuel while scaling up investments in renewables. 28 new members signed up to the Powering Past Coal Alliance, joining more than 150 countries, sub-nationals and businesses, accounting for over US$17 trillion in assets. With nearly three quarters of global greenhouse gas emissions stemming from energy production, the transition towards clean energy sources is a necessity for tackling climate change and keeping global warming below 1.5 degrees Celsius. Africa is a continent which still relies heavily on fossil fuels and biomass for its energy needs, yet has terrific potential for renewable power. The International Renewable Energy Agency (IRENA) perhaps puts it best:
“Endowed with substantial renewable energy resources, Africa can adopt innovative, sustainable technologies and play a leading role in global action to shape a sustainable energy future,” – IRENA, Scaling up Renewable Energy Deployment in Africa.
Africa’s Clean Energy Transition
Global economic and technological shifts are lending themselves towards cheaper and more accessible renewable power in Africa. The cost of solar PV energy decreased by 77 per cent between 2010 and 2018, and the price tags of other innovative technologies, like green hydrogen and lithium-ion energy storage, are also expected to continue falling. Independent power producers like AMEA Power are supporting this transition, with one example being the Sheikh Mohammed Bin Zayed solar PV power plant in Togo, which will provide 50 megawatts (MW) of clean energy to 600,000 households and 700 small to medium-sized enterprises in the region. Another example is the Kipeto Wind Power Project in southwest Kenya, which is the second largest wind power project in the country with a generation capacity of 100MW of clean electrical energy.
Financing remains the most significant challenge to large-scale renewable energy in Africa, according to the International Monetary Fund, so investment managers with knowledge and expertise to mobilise funds for large-scale projects on the continent are sorely needed. African Infrastructure Investment Managers (AIIM) develops and manages private equity funds which invest in long-term African infrastructure projects. Through its IDEAS Managed Fund, AIIM made a significant investment into Witkop Solar Park, a 30MW solar PV facility supplying electricity to over 6,000 households in the Limpopo region of South Africa. Witkop is connected to the national grid under the South African Renewable Energy Independent Power Producer Programme, an initiative designed to facilitate private sector investment into grid-connected renewable energy.
Olusola Lawson, co-managing director at AIIM, highlighted the importance of developing strategies that are “cognisant of certain constraints, like financing, to maximise the near-1.5TW renewable energy generation potential across the continent.” He described return on investment in African renewable energy as being potentially very high as upfront costs fall and regulatory and financing barriers lift. Bboxx is another excellent example of an AIIM investment with a scalable model, which in just over a decade has grown from inception to now operating in 10 countries to provide over two million people with clean electricity and utilities.
Green Hydrogen’s potential
Hydrogen produced through electrolysis and powered by renewable energy is labelled as ‘green’. This potentially zero-emission energy source could supply up to 25 per cent of the world’s energy needs and become a US$10 trillion addressable market by 2050, predicts Goldman Sachs. Despite its credentials, green hydrogen currently accounts for less than five per cent of hydrogen produced globally, the rest is primarily ‘grey hydrogen’, which is produced through carbon and methane-intensive methods. The African Hydrogen Partnership (AHP) is a continent-wide association dedicated to the development of green hydrogen, hydrogen-based chemicals, and hydrogen-related business opportunities across Africa. In an interview with Gong for its Africa Net Zero series, AHP co-founder and secretary general Siggi Huegemann describes green hydrogen as a key factor for decarbonising nations worldwide as they become green energy importing nations. He sees African countries as having enormous potential for producing huge amounts of low-cost green hydrogen to meet this demand. “One cannot decarbonise Europe without African hydrogen,” Siggi says, expanding on the need for large-scale hydrogen projects spanning several countries to diversify energy sources for importing nations.
The ‘Net Zero by 2050’ scenario proposed in the International Energy Agency’s World Energy Outlook 2021 predicted a strong emergence of inter-regional hydrogen trade. COP26 saw the inception of the Africa (and Latin America) Green Hydrogen Alliance to kickstart the development of the low-carbon fuel for use in both domestic and international industries. In a space where cross-sector dialogue, engagement and participation are pivotal for global scalability and the adoption of this relatively nascent technology, collaborations like the African Green Hydrogen Alliance and AHP will be critical.