African businesses and power producers need to keep up with the ever changing energy landscape to ensure that the industry reaches its full potential.
Bhavtik Vallabhjee, head of power, utilities and infrastructure – advisory coverage at Barclays Africa identifies five key trends that will impact on the way live and work:
1. Coal power plants are becoming more difficult to finance as there is a greater move towards investment in low-carbon technologies and green energy
More countries and companies worldwide are focusing on going green and investing in low-carbon technologies.
Christopher Bredholt, a Moody’s vice-president, senior analyst and the report’s author said, “The South African renewable energy market has grown rapidly over the last five years or so, and there is rising demand for renewables debt”. Financing coal power plants will become increasingly difficult as low-carbon technologies and green energy continue to become more usable.
2. The growing appetite for renewable energy in emerging markets
The African countries have taken great shift from coal to other sources such gas to fuel power plants.
Connecting renewable energy onto the grid is becoming more affordable as Africa is blessed with abundant natural resources such as great solar irradiation and wind resources.
3. The rise of battery storage
In the past five years, there has been a massive investment in battery storage research and development by leading global companies such as Samsung, Tesla and Total – and is likely to continue to gain momentum when coupled with solar photovoltaic plants for storage of energy.
4. The power of distributed generation and the rise of smaller grids
African countries have had challenges in the past with providing their citizens with electricity. A typical example would be the Eskom load-shedding which hit SA in 2015.
Distributed generation has the ability to bring more citizens into the energy fold by building smaller power stations at specific load centers, rather than building bigger, centralised stations that need to transmit power long distance.
This helps in reducing transmission losses as power would not need to be evacuated over long distances.
5. The long-term move towards integrated grids through increased investment in transmissions projects
In developed markets such as the US and Europe, the country with a surplus power is able to evacuate power to the one with deficit power through the linked grids. This is not the case in Africa, where there are very distinct regional power pools.
Although investment in transmission projects to link grids is slowly increasing, with many examples of transmission projects in countries such Ethiopia, Kenya and Mozambique, it is a gradual development and an expensive exercise.