Africa Needs $835 Billion To Fix Power Deficit

Africa Needs $835 Billion To Fix Power Deficit
The power line is part of the East Africa Power Pool project

AFRICANGLOBE – Nigeria and the other countries in Africa would require more than $835 billion of capital to fix its generation, transmission and distribution plants by 2040.

Besides, Nigeria needs $350 billion to provide uninterrupted power supply by 2030.

A research and consulting firm, Mckinsey & Company, which made this disclosure in its Electric Power & Natural Gas report, with focus on the growth potential of the Africa’s electricity sector, stated the region would require about $490 billion of capital for new generating capacity, plus another $345 billion for transmission and distribution.

It identified regional integration, such as power pools, and promotion of renewable generation are game changers that could shape the energy landscape in Africa over the next 25 years.

It stated: “We found that significantly increasing regional integration could save more than $40 billion in capital spending, and save the African consumer nearly $10 billion per year by 2040, as the levelized cost of energy falls from $70 per megawatt-­hour to $64 per megawatt-­hour. Higher levels of integration would result in larger region l gas options being favored over some of the smaller in-­country solar and wind additions, leading to an increase in carbon emissions.

“If Africa aggressively promotes renewables, it could obtain a 27 percent reduction in CO2 emissions; this would result in a 35 percent higher installed capacity base and 31 percent higher capital spending (or an additional $153 billion)”.

According to the report, by 2040, Africa will demand about 1,600 terawatt hours of power, led by growth in industrial and residential demand. “If Africa achieves these demand levels, it would represent a fourfold increase in power consumption compared with today, representing about 4.5 per cent yearly”, it added.

Gas is estimated to be able to deliver about 400 gigawatts of power. Over the past half-­decade, gas has become a much more attractive opportunity in Africa.

It added that countries with electrification rates of less than 80 percent of the population consistently suffer from reduced GDP per capita.

It noted that the only countries that have electrification rates of less than 80 percent with GDP per capita greater than $3,500 are those with significant wealth in natural resources, such as Angola, Botswana, and Gabon. But even they fall well short of economic prosperity.

The reported pointe out: “Whether people can obtain electricity (access), and if so, how much they are able to consume (consumption) are the two most important metrics that can indicate the degree to which the power sector is supporting national development. From an electricity-­access point of view, Africa’s situation is the world’s worst. It has 13 percent of the world’s population, but 48 percent of the share of the global population without access to electricity.

“The only other region with a similar imbalance is South Asia, with 23 percent of the world’s population and 34 percent of the people without access to electricity. This means that almost 600 million people in Africa lack access to electricity. Only seven countries—Cameroon, Côte d’Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa—have electricity-­ access rates exceeding 50 percent. The rest of the region has an average grid access rate of just 20 percent. Moreover, even when there is access to electricity, there may not be enough to go around”.

Meanwhile, the Minister of Power, Prof. Chinedu Nebo stated that the sector is not only expensive but also takes time to deliver its projects.

Giving an estimation of the total cost of one megawatts, he said this goes for about $1.5 million, approximately N300 million.

According to him, projects usually take five to seven years to materialise, adding that the actualisation of such comes with adequate planning, doggedness, determination to make sure that what was planned is realised.


By: Roseline Okere