Tuesday, June 25, 2013

Renewable Energy Becomes Cost Competitive in Africa

The African continent is witnessing a stunning surge in the use of renewable energy as supply sources such as solar and wind power emerge as the lowest cost options for developing countries still struggling with poor infrastructure.
South Africa plans to bring 6.9 gigawatts of renewable energy capacity into play by the end of this decade, awarding 2.4 gigawatts in contracts via the first two windows of its procurement program.
At the other end of the continent, Morocco has also launched its own swathe of ambitious renewable energy programs. It plans to develop 850 megawatts in wind capacity in the form of five projects, which the goal of installing two gigawatts in capacity by 2020.
In the area of solar power, Morocco is on track to build the world’s largest concentrated solar power plan in the form of the 500 megawatt Ouarzazate project. Phase one of the project is already under construction, while Phase two is in the midst of procurement.
Despite a sharp decline in total global investment in renewable energy in 2012, which fell to $244 billion from $279 billion the preceding year, the Middle East and Africa experienced are markable increase in regional spending, surging 228 per cent to hit $12 billion.
A new report from the energy team of Baker & McKenzie suggests this trend is set to continue, with solar PV and other renewable energy sources now competitive against conventional rivals, especially in rural areas situated far from grid infrastructure.
For rural African communities, renewable energy has become cheaper than diesel or coal-fired generators once fuel costs are taken into consideration as a result of limited refining capacity and poor pipeline networks.
“Certain categories of renewable energy have become the de facto least cost generation option when compared to conventional new build alternatives,” says Christopher Clarke, founding partner of Inspired Evolution Investment Management.
“The average price for wind in the last bid was 89 Rand cents per kilowatt-hour, which is cheaper than the equivalent cost of cleaner coal new build in South Africa.”