Electricity Distribution and Power Challenges Create Investment Opportunities for Africa

May 27, 2015
With power interruptions resulting in huge economic losses globally of up to $150 billion annually, and South Africa currently in the midst of loadshedding due to power shortages..

With power interruptions resulting in huge economic losses globally of up to $150 billion annually, and South Africa currently in the midst of load shedding due to power shortages, vast investment opportunities exist within the energy space. Leaders from various sectors across the African continent gathered at the 15th African Utility Week (AUW) conference in Cape Town to discuss and address current energy challenges.

"Over 620 million people in Africa are living without access to electricity; the economic potential to be unlocked is immense," notes Johan Muller, Program Manager for Energy & Environment at Frost & Sullivan. "The African economic environment has seen a steady increase in the financial investment it has attracted over the past decade. Discoveries of massive gas reserves on the Eastern Coast and renewable energy potential, new business models, innovative technologies, a change in the energy mix of countries, and a surge in energy needs due to urbanisation are just some of the key driving forces impacting the energy space."

During the 'Transmission & Distribution' track that took place at AUW, it was noted that aging and insufficient transmission and distribution networks severely impede the unlocking of Africa's economic potential on average. Service delivery pressure is increasingly placed on cities due to urbanisation trends – largely driven by higher access to power rates than what is found in rural areas, which in certain countries are as low as 2 percent.

In sub-Saharan Africa, power transmission and distribution losses are averaging 18 percent, excluding South Africa which is witnessing losses below 10 percent, a figure on par with world average. Certain countries in West and Central Africa are witnessing losses of more than 25 percent.

"Gas will be a major game changer," states Muller. "Recent Frost & Sullivan analysis highlights Nigeria, Mozambique, Tanzania, South Africa, Ghana and Ivory Coast as potential gas hotspots. Closer to home, the large gas finds in Mozambique of approximately 125 Tcf offer an opportunity to increase gas fired power generation in South Africa. Exploring this gas to power opportunity could lead to a possible solution to our load shedding issues."

Tracks covered at the conference included solar, metering, renewables, investment and more specifically presentations on: "Exploring uses for next generation energy storage", "Revenue protection: Challenges, opportunities and achievements", "Cost reduction strategies for utilities, municipalities and cities", and "Alternative energy: The new energy mix for mining, manufacturing and commercial industries," among others.

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