Friday, 20 May 2022

In Industry

Opportunities in African Renewable Energy Industries

There is unfathomable potential for Africa in the renewable energy industry, and it is a must invest for small to medium scale businesses. According to QZ, Kenya is also a major leader and opened Africa’s largest wind farm last year and is on course to soon be able to claim 100% renewable energy from a range of sources including geothermal and solar.

Investment in clean energy in sub-Saharan Africa jumped to $7.4 billion in 2018 up from $2.3 billion in 2017. To put things in perspective, the areas of renewables that have potential in Africa include Wind Power, Hydropower, Geothermal, and Bio Energy. 

Solar Energy – Solar energy, radiant light and heat from the sun, is harnessed using a range of ever-evolving technologies such as solar heating, photovoltaics, concentrated solar power (CSP), concentrator photovoltaics (CPV), solar architecture and artificial photosynthesis.

Wind Power – Wind-generated electricity (Air flow can be used to run wind turbines.)

Hydropower – Since water is about 800 times denser than air, even a slow flowing stream of water, or moderate sea swell, can yield considerable amounts of energy.

Geothermal – Thermal energy generated and stored in the Earth.

Bio Energy (including Biomass, Biogas, and Biofuel) – Bioenergy is renewable energy made available from materials derived from biological sources. Biomass is any organic material which has stored sunlight in the form of chemical energy.

Africa has shown great progress in the development of its solar energy markets over the last year. According to the International Renewable Energy Agency (IRENA), last year’s growth was primarily driven by five specific countries: Egypt, South Africa, Kenya, Namibia and Ghana.

Developing countries in Africa are popular areas for the application of renewable energy technologies. Today, many countries are already operating small solar, wind and geothermal equipment to provide electricity to urban and rural populations. Due to the high cost of transporting electricity from large power plants, these types of energy production are particularly useful in remote areas. The application of renewable energy technology has the potential to alleviate many of the problems that Africans face every day, especially if human rights are put first in a sustainable way. Access to energy is essential to reduce poverty and promote economic growth. Communication technology, education, industrialization, agricultural improvements, and the expansion of municipal water supply systems require adequate, reliable and cost-effective access to energy.

Africa has seen immense growth in its renewable energy sector. In 2017, investment in renewable energy projects in sub-Saharan Africa more than doubled to $2.3 billion from $1 billion in 2016. That’s according to a new report released by the International Renewable Energy Agency (IRENA) and the SolarPower Europe lobby group. The majority of this investment went towards utility-scale solar and wind farms, with Morocco taking the lead on that front with $850 million invested.

The African Development Bank is allocating $15bn for investments in renewable energy between 2014 and 2020. The Africa Renewable Energy Fund (AREF) invests into small hydro, wind, geothermal, solar, stranded gas and biomass projects across Sub-Saharan Africa, excluding South Africa.

Berkeley Energy, as the fund’s managing Organisation, has experience in over 120 renewable energy and power engineering, construction and investment projects in Africa and Asia. It is a focused investor, developer and deliverer of renewable power assets.

In 2018, the Africa Renewable Energy Fund (AREF) has committed to invest US$25m in projects in Ghana, Kenya, Uganda and Tanzania. The objective is to support the development of a sustainable energy system and build brighter future for all.

The Strategic Partnership Initiative (SPI) seeks to enhance African countries’ ability to develop and apply renewable energy technology by supporting technical and professional capacity building through a learning path that integrates diverse experiences. Its focus is on small-scale, rural communities where there is already potential for micro-hydropower projects and community renewable energy systems. To date, SPI’s learning path has been delivered in Zimbabwe.

Hydropower, wind power, and solar power get their energy from the sun. The sun releases more energy in one second (3,827 × 1026 J) than all fossil fuels (3.9 × 1022 J) that exist on earth, so it has the potential to meet all of our current and future global energy needs. Since solar energy production has no direct emissions and refueling is not necessary, African countries can protect their people, their environment and their future economic development by using renewable energy. For this, they have many possible options.

Africa is like a positive permanent thin climate as a huge desert of Sahara, so Africa receives the greatest sunlight compared to all other continents on Earth. There are solar resources much larger than other continents. The desert area is quite cloudy, but as it is not close to the Ecuador, while the sun is still irradiated with a global sun, the sun is rising as the sun. The distribution of solar resources throughout Africa is quite uniform, and more than 85% of the continental landscapes receive at least 2,000 kWh / (m 2 years). Recent studies have shown that solar energy facilities covering only 0.3% of the areas, including North Africa, can provide all the energy required for the European Union.

In South Africa, there is opportunity for investing in renewables through the Renewable Independent Power Producer Programme.

The renewables programme, which is seen as an example for other African countries, has resulted in over 6 000 MW of generation capacity being allocated to bidders across a variety of technologies, principally in wind and solar. Renewable Independent Power Producer Programme (REIPPP) is aimed at bringing additional megawatts onto the country’s electricity system through private sector investment in wind, biomass and small hydro, among others

Khoi Capital recommends Solar Energy, saying "There are numerous business models in the renewable energy sector and if you are not looking at one, you might be losing out big time in future. The potential in this industry is so great; it’s hard to know where to start. But let’s start at the easiest. The easiest way to get started in this industry is without a doubt solar. The cheapest way would be solar panel installation which requires only time and skill. Continuing to the setup based on requirements".

A lot of potential for small businesses in this industry lies in energy storage. The energy harnessed from the sun, wind or water needs to be stored. A haven for small businesses would be in either an on-site energy storage provider or an off-site provider.

To minimise the cost of electricity this industry needs to grow. This is because small businesses are more likely to be struggling to get any cheaper electricity than their competitors and thus, they need to look for cheaper ways of getting the equipment in order. Smaller companies may not have the time or resources or know how required to achieve higher levels of energy efficiency, so they may consider purchases of equipment from large companies. In order to start with a small company, it is important that you start lean and simple and then upgrade as you find out what your needs are.

In order for this to be a possibility I recommend that you look at the trends within the industry and look at who is growing and where they are doing it. In my opinion small enterprises are not going to be able to negotiate power prices as most of them won’t have power contracts. As a result, they are going to have to source their own electricity via suppliers like Aliyun, WePower, Oasis Energy, SunEdison or other alternative energy providers

Khoi Capital recommends "When starting off in this industry, you should look at how you can simplify your business plan".

Sources: Khoi Capital, Get-Invest, Gov.Za

Cabanga Media Group publishes of thoughtful economic and business commentary magazines and online media, in several African markets, that include South Africa, Botswana, East Africa Community, Ethiopia, Egypt, Nigeria, and Zambia.