Could Africa Be the Next Renewable Energy Heaven?

Davis Wright Tremaine LLP
Contact

Davis Wright Tremaine LLP

[co-author: Dee Akinbosade*]

It has been 13 years since the World Bank concluded that Africa had "huge technical potential for clean energy projects." More than a decade after, how much has Africa lived up to this potential?

The African Development Bank Group found that some 640 million people do not have access to energy in Africa, with more than 30 out of the 54 countries on the continent going through an energy crisis. Additionally, the continent is heavily dependent on fossil fuels, with over 80 percent of power generated coming from coal, oil, or natural gas. This inordinate reliance on such resources exposes the region to significant carbon risks and can make Africa a difficult place for certain U.S. companies to invest should they wish to stay consistent with their various carbon commitments.

International oil companies dominating Africa's energy industry have consistently been accused of environmental degradation—including oil spills, gas flares, fire disasters, improper waste disposal, and water contamination among other things. But fossil fuel developers are starting to face more pushback, as illustrated by the controversial ReconAfrica project in the Okavango Basin.

The Canadian company heading that project had secured a 13,200 square-mile license area for exploratory drilling in Namibia and Botswana and upstream of the Okavango Basin, a UNESCO World Heritage site that is one of the most pristine wildlife sanctuaries. The project has since come under scrutiny, as it has become apparent that ReconAfrica failed to obtain necessary permits, especially with regard to polluted water discharges.

These issues have created the momentum necessary for the continent to begin embracing a paradigm shift towards renewable energy and clean energy technologies. Significantly, African countries have begun developing large renewable energy projects as a launch pad to a sustainable energy future.

First, Egypt presently hosts the fourth largest solar power plant in the world. The Benban Solar Park is a photovoltaic power station with a total capacity of about 1,650 MWp. The facility was constructed by the state-owned New and Renewable Energy Authority (NREA) and is poised to produce over 4TWh and prevent the emission of over 2 million tons of carbon dioxide annually.

Second, Kenya recently completed the construction of its Menengai geothermal power plant, making the East African country the first and largest African producer of geothermal energy. Depending mainly on geothermal energy, Kenya has successfully increased its energy production from 169 MWe to 672 MWe in a little over six years. The Kenyan government had embarked on a renewable energy development plan in 2011 with the objective of increasing power generation from 1,227MW in 2010 to 3,751MW by 2018. The country has now successfully surpassed this goal with the construction of the Menengai power plant.

Last but not least, South Africa has proven to be a destination country for renewable energy technology, so much so that IHS Markit has singled out South Africa as the "world's most attractive emerging country for solar energy." Saudi developer ACWA Power recently began construction of the Redstone project, a concentrated solar power (CSP) plant considered to be the largest renewable energy investment in South Africa with the injection of about ZAR 11.6 billion ($822,614,232). Project Redstone is tipped to deliver clean electricity to over 200,000 households and is expected to prevent over 440 metric tons of CO2 emissions annually.

While progress is notable, several factors combine to slow the pace of the adoption of renewable energy technologies on the continent. Some obstacles include the lack of technical knowhow and skilled labor, inadequate legal and institutional framework, poor infrastructure, and exorbitant initial capital costs.

With that said, there is still undeniable appetite for renewable energy developments and an abundance of solar and geothermal resources on the continent. With the right investors and the ever-decreasing cost of renewable energy, especially solar, Africa could very well become an important renewable energy hub offering interesting investment opportunities for U.S. companies, especially as these opportunities allow companies to remain consistent with ambitious greenhouse gas emissions reduction targets.

* Dee is a Summer Associate at DWT and a 2nd year law student at the University of Oregon School of Law.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Davis Wright Tremaine LLP | Attorney Advertising

Written by:

Davis Wright Tremaine LLP
Contact
more
less

Davis Wright Tremaine LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.