In Africa, South Africa has invested in wind farms on the West Coast, and along the highways of the Western Cape, one sees a number of solar panels gracing the roofs of government subsidised houses in the overpopulated townships. The national energy supplier, Eskom, has also offered incentive and rebate schemes to households and businesses that invest in solar geysers. In 2011 the World Bank agreed to finance a $250 million wind (in Vredendal on the West Coast) and solar power plant (Upington, Northern Cape).
Elsewhere in Africa, a number of initiatives have already shown great promise. For example, on the African East Coast, Kenya is the leader in geothermal generation in Kenya having built the first geothermal plant on the continent in Naivasha in the Great Rift Valley. The first commercial exploration of power started here early in the 1980s.
In North Africa; the government of Tunisia has invested heavily in solar energy technologies.
“Africa is generally aware of the importance of renewable energy (RE) as a business case, but has not yet figured out the most viable investment strategy to employ,” says Dr Agostinho Zacarias, South African resident co-ordinatior for the United Nations Development Programme. He is a headline speaker at the African Utility Week conference and exhibition which will be held in Johannesburg from 21-24 May.
“There is disillusionment about entry points and required capital outlay, with most governments either under- or over-estimating the related costs. The most prominent constraint is meeting the costs for project start-ups such as feasibility studies, environmental impact assessments and pilot project implementation, most of which should be met by public funding and/or guarantee.”
Zacarias adds: “In some situations there are policy vacuums that make it impossible to attract investment – both internally and foreign direct investment. In the case of South Africa, the legislation is coming right but rather late as most innovative companies who pioneered in the RE field have actually given up or burnt their fingers.”
“In South Africa there have been challenges in the rebate schemes that were introduced by the South African government with the participation of the public utility company. Some of the surviving pioneering companies have since immigrated to less legislated countries to try to try and set up businesses there.”
Incentive structures are often not viable in the long term, making investment in RE less attractive for investors. This can include anything from government subsidised solar heating systems (South Africa) to property tax reductions or waivers where households have made efforts to switch to renewable energy sources as is the case in some states in America.
“In Africa the incentives are normally driven by multi-lateral funding rather than business viability or national government institutions' support schemes that are based on the national fiscus,” says Zacarias who will specifically address “Policy mechanisms governing renewable energy” at African Utility Week.
“This tends to complicate the ownership and buy-in as these incentives are drawn upon as long as they are made available. But when the external support mechanism is withdrawn, the project dies.”
Zacarias believes it is imperative for government and industry leaders to attend high-level meetings like COP17 and African Utility Week. “The more government leaders are exposed to RE and Energy Efficiency (EE) solutions, the higher the likelihood of uptake of similar propositions that may be advanced by technocrats in their own countries,” says Zacarias.
African Utility Week is perfectly poised to help governments;
The Renewable Energy track is, however, only one of eight tracks at African Utility Week – the biggest conference and exhibition of its kind in Africa. Conference and exhibition attendees can explore information on Large Power Users, Metering, Transmission & Distribution/
Conference: 22-23 May 2012
Exhibition: 21-23 May 2012
Pre-conference workshops: 21 May 2012
Site visits: 24 May 2012
Event location: Nasrec Expo Centre, Johannesburg