Wednesday, February 22, 2012

Africa:

Financing Renewable Energy in Developing Countries: Drivers and Barriers for Private Finance in sub-Saharan Africa (PDF)

This new report outlines how current obstacles to the scaling-up of sustainable energy solutions in Africa - namely cost, infrastructure, and risk - can be tackled with the involvement of private finance. The report's conclusions and recommendations to sub-Saharan Africa and international policy-makers are based on a survey of 38 financial institutions.



Extract from the report: The region also has large geothermal potential. The Great Rift Valley, located in eastern Africa, is an area with high geothermal activity. It is estimated that around 9,000 MW could be generated from geothermal energy in this area, yet the installed capacity in Kenya and Ethiopia – the two main exploiters of this region – is far less, with 167 MW and 7.3 MW respectively.


Kenya has been challenged to increase electricity production from renewable sources like wind and solar to achieve its goal of connecting all citizens by 2030. A new report by the United Nations Environment Program (Unep) says unless that happens, 2030 will find millions of people still living in darkness. Unep executive director Achim Steiner however praised the country's plan to boost geothermal power production. “The more fossil fuel you use the more expensive it becomes but the more renewable energy you use the cheaper it becomes,” he said.

Steiner was speaking in Gigiri at the launch of the report entitled 'Financing Renewable Energy in Developing Countries: Drivers and Barriers for Private Finance in sub-Saharan Africa'. It names Kenya among African countries with a large potential for wind power. Others are Cape Verde, Madagascar, Sudan and Chad. The government hopes to connect all Kenyans to electricity by 2030 but high tariffs are a major challenge.

The report advises governments to opening up energy markets to private investors. “In doing so, millions can be lifted out of poverty,” says the report, released to mark the Africa launch of the United Nations 2012 International Year of Sustainable Energy for All. "Many countries in Africa are already successfully testing the technologies and policies needed to bring energy to rural areas and growing cities", said Adnan Z Amin, Director-General of the International Renewable Energy Agency (IRENA).

This is part of the reports being released during the ongoing Unep governing council meeting and the Global Ministerial Environment Forum in Nairobi. The two day meetings end today. It says current traditional energy sources like jikos present risks like the inhalation of smoke, which is partly responsible for about 1.9 million annual deaths worldwide . In Kenya, hydroelectric power accounts for at least 44 percent of the total installed capacity, with thermal and geothermal power accounting for 41 and 9 percent, respectively. Geothermal energy is however expected to replace hydro energy as the major source of electricity.

The Unep study shows how policy incentives can help reduce the higher costs associated with electricity generation from renewables and improve the competitiveness of investments in the sector compared to traditional energy sources. Kenya introduced a feed-in tariff in 2008 to expand renewable energy power generation in the country. The investment is expected to create jobs through construction of power plants, grid connection and maintenance.