Energy transition: Africa requires $2.64trn for renewable energy sources – Sahara Group

The Sahara Group says Africa requires about 2.64 trillion dollars, roughly the size of its Gross Domestic Product (GDP), to rely on renewable energy sources for electricity generation by 2050. The company says Africa is expected to embrace more of natural gas and renewables for its energy in the coming years even as oil use will continue to increase. The energy conglomerate said this at a workshop for the Energy Correspondent Association of Nigeria, on Wednesday in Abuja, tagged, “Energy Transition: The Road Not Taken.” In a presentation, Ejiro Gray, Director, Governance and Sustainability, Sahara Group, said funds would be for the installation of the renewable energy sources. This, she said, would also include infrastructure needed for generation, network and storage system as well as other enabling costs. “Despite the promise of African renewable market, risks on three levels continue to prevent many investors from committing their capital,” she decried.

Gray listed the levels as macro, industry and transaction levels. “Macro level comprises political risk which is associated with political events that adversely impact the value of investment, then off-taker risk which involves credit and default risk and currency risk associated with volatile forex rate that affects investment. Industry level comprises policy associated with taxes and regulatory policies that have adverse effect on projects, then grid and transmission risk associated with limitations, interconnection and liquidity risk associated with operational liquidity and revenue shortfall issues. Transaction level comprises of financing risk associated with financing instruments, then re-financing risk which bothers on loan, and technical risk associated with countries’ know-how for structuring and transactions,” she said. She said while fossil fuel would continue to remain the major source of Africa Energy demand, particularly through oil, it was expected that there would be a major shift towards a modern and cleaner energy.

She said natural gas would now begin to play the role of bridging between more polluting fossil fuels and zero carbon technologies such as wind and solar energy. According to her, biomass and coal are expected to experience the most significant drop-offs in the coming decades. She stated that the company supplied 25 per cent of natural gas currently in Nigeria, adding that Africa is expected to embrace more of natural gas and renewable energy in coming years even as oil use continues to increase. Gray, while advocating for value chain integration, funding, investment, de-risking and infrastructure to drive transition, said Sahara group would continue to make investments along the entire gas value chain from production to transportation to consumption. (NAN)