Initiatives for Addressing Energy Poverty in SSA

Initiatives for Addressing Energy Poverty in Sub-Saharan Africa

By: Seppi Saatchi & Sahel Mirrazavi, January 13th 2024

Edited by: Sahel Mirrazavi

Infrastructure Improvement Initiatives for Addressing Energy Poverty in SSA:

Infrastructure improvement is commonly noted in both literature and government planning as an untapped asset with massive potential for improving both energy access and affordability in SSA. Countries including Ghana, Kenya and Rwanda that are on track for reaching full energy access by 2030 represent potential success stories where the extension of national grids will play a pivotal role in addressing energy access (Key Findings – Africa Energy Outlook 2022, 2023). Additionally, a study conducted by the Word Bank in 2010 determined that infrastructure development contributed to over half of Africa’s improved growth (Singh & Inglesi-Lotz, 2021). However, major barriers to energy infrastructure development exist with poor governance inhibiting investments in domestic energy infrastructure expansion—especially considering the substantial investments required to significantly improve energy infrastructure. Despite this challenge, a technology trend in SSA observed in recent years includes the incentive to use gas which is instigated by reforms in the power sector and the approval of gas infrastructure projects (Singh & Inglesi-Lotz, 2021). This trend is prominent in Nigeria, the largest gas consumer and producer in the region. Additionally, new gas projects are also being realized on the east coast in Mozambique and Tanzania–where similar trends will likely be observed with their huge offshore discoveries (Singh & Inglesi-Lotz, 2021).

Centralized Grid Access and Mini Grid Developments for Addressing Energy Poverty in SSA:

In relation to infrastructure development, extending the centralized national and regional grids remains a likely requirement in addressing energy poverty in SSA. In IEA’s detailed analysis on the subject, it was determined that extending national grids is the least costly and most prudent option for almost 45% of SSA gaining energy access by 2030 (Key Findings – Africa Energy Outlook 2022, 2023). In a study conducted by Mukhtar et al. (2023) where 2030 and 2040 were set as the target years of implementation, they determined that a SSA central grid is both the fastest and most feasible solution for addressing energy poverty. Mukhtar et al. (2023) also assessed different scenarios of renewable energy implementation into this centralized grid in which they found it to be a viable and sustainable option. However, this would require strategic financial planning collaborated by governing bodies in the regions (Mukhtar et al., 2023). The cheapest and easiest pathway determined by Mukhtar et al. (2023) in expanding the centralized grid system in the region included the integration of the existing fossil-fueled power systems with renewable technologies, mainly wind systems. Mukhtar et al. (2023) estimated the energy sector carbon reductions in this scenario to be 56.6% and 61.8% by 2030 and 2040 respectively. Despite extending national and centralized grids being a seemingly viable option for addressing SSA’s energy poverty challenges, these options become less economically feasible and more challenging for highly remote areas. The previously mentioned IEA analysis suggested that in these areas, mini-grids and stand-alone systems are the most viable solutions (Key Findings – Africa Energy Outlook 2022, 2023). Solar based systems will likely be seen at the center of this approach due to their affordability and increasing popularity in mini-grid production (De Zárate, 2023). In the IEA’s Sustainable Africa Scenario, the cost of solar PV is expected to decrease dramatically. This option also poses a major financial benefit as it is easier to procure private investments into these mini-grid projects. For example, agricultural companies in Ethiopia are providing the capital for mini-grids for a wide range of uses including domestic, commercial, and small industry uses (De Zárate, 2023).

Fuel Improvements and Energy Efficient Technologies for Addressing Energy Poverty in SSA:

Dirty cooking fuels and improvised cook stoves pose major health risks to energy poor households in SSA. Therefore, liquefied petroleum gas demonstrates the potential of alleviating health risks associated with energy use in urban areas (Key Findings – Africa Energy Outlook 2022, 2023). However, this fuel source faces affordability challenges causing many households to continue relying on biomass as a main fuel source. This is where alternative cooking technologies such as improved biomass cook stoves may play a pivotal role in transitioning SSA’s energy poor households to safer alternatives (Key Findings – Africa Energy Outlook 2022, 2023). Improved cookstoves and more efficient household technologies, in general, also pose the advantage of addressing many of the previously mentioned socioeconomic challenges for women living in energy poor households including reducing health risks and time spent collecting fuels. Efficiency additionally allows for a cost effective solution in improving energy access as it reduces the strains on existing infrastructure (Key Findings – Africa Energy Outlook 2022, 2023). An IEA report estimates that improving energy efficiency holds the potential to reduce electricity demand in SSA by 30% in 2030 (Key Findings – Africa Energy Outlook 2022, 2023). The main technology shifts required to meet this include improving building codes, energy performance standards, and efficient appliances and lighting.

Energy Subsidies for Addressing Energy Poverty in SSA:

Fuel subsidies were a popular political tool utilized by various governments across SSA which aimed at decreasing the cost of fuels for consumers—which would in turn increase, specifically fossil fuel, energy consumption and therefore elevated cost burdens for energy poor households. However, many governments recently began to lean away from subsidies as the price spikes in energy during 2022 ran the risk of doubling energy subsidy burdens for governments (Key Findings – Africa Energy Outlook 2022, 2023). This is especially distressing for countries already burdened by debts (Key Findings – Africa Energy Outlook 2022, 2023). These subsidy halts/reductions were demonstrated by Ethiopia and Uganda in 2022, as well as by Nigeria in 2023 (De Vergès, 2023). Nigeria serves as a prime example of how nationally funded energy subsidies, specifically on fossil fuels, may not be well equipped for even the larger economies within SSA—with a fifth of Nigeria’s federal budget being spent on energy subsidies in 2022 despite insubstantial improvements to energy poverty (De Vergès, 2023). Despite this, an IEA report suggested that internationally funded subsidies schemes in SSA coupled with the specific targeting of these subsidies on the most in-need households could be a less costly alternative (Key Findings – Africa Energy Outlook 2022, 2023).

Sources:

De Vergès, M. (2023, October 18). In Africa, governments cut back on fuel subsidies. Le Monde.fr. https://www.lemonde.fr/en/le-monde-africa/article/2023/10/18/in-africa-governments-cut-back-on-fuel-subsidies_6183341_124.html

De Zárate, F. (2023, September 25). Sub-Saharan Africa, the renewable paradise where not everyone has access to electricity. EL PAÍS English. https://english.elpais.com/climate/2023-09-25/sub-saharan-africa-the-renewable-paradise-where-not-everyone-has-access-to-electricity.html

Key findings – Africa Energy Outlook 2022. (2023). IEA. https://www.iea.org/reports/africa-energy-outlook-2022/key-findings

Mukhtar, M., Adun, H., Cai, D., Obiora, S., Taiwo, M., Ni, T., Ozsahin, D. U., & Bamisile, O. (2023). Juxtaposing Sub-Sahara Africa’s energy poverty and renewable energy potential. Scientific Reports (Nature Publishing Group), 13(1). https://doi.org/10.1038/s41598-023-38642-4

Singh, K., & Inglesi-Lotz, R. (2021, January). The role of energy poverty on economic growth in sub-Saharan African countries. https://repository.up.ac.za/handle/2263/79811#:~:text=The%20empirical%20investigation%20found%20that,impact%20on%20a%20direct%20basis.