New UNEP report suggests ways to overcome power generation barriers

A new report from the United Nations Environment Programme (UNEP) Finance Initiative, titled Financing Renewable Energy in Developing Countries: Drivers and Barriers for Private Finance in sub-Saharan Africa, has identified three main barriers to electrical power generation in developing countries and proffered ways to counter them.

Listing them as cost, structure and risk, the study shows how policy incentives can help reduce the higher costs associated with electricity generation from renewables and improve the competitiveness of investments in the sector, versus traditional energy sources.

Giving examples of how such incentives at national and international levels are already making a positive impact in Africa, it says in Kenya, a government feed-in tariff introduced in 2008 to expand renewable energy power generation in the country, will incentivise an estimated additional energy generation capacity of 1300 Megawatts (MW) – more than double Kenya’s present capacity.

“The increased investment in renewables is also expected to trigger significant job creation through construction of power plants, grid connection and maintenance,” according to a statement from UNEP announcing the report.

It adds that Uganda’s dedicated renewable energy policy, has also been praised for developing an institutional infrastructure for management of the Clean Development Mechanism (CDM) that has successfully led to a spurt in renewable energy activity.

“In 2008, Uganda had 550 MW of total installed capacity, of which 315 MW were hydro-based. By 2010 there were 300 MW of renewable energy in the CDM pipeline, including new terrain for Uganda in the area of biomass,” UNEP says.

The report maintains that among rural communities in sub-Saharan Africa, where only 2-5 percent of people are connected to the electricity grid, using renewable energy in the form of mini-wind, bio-energy or solar household systems to improve energy access can be more cost-effective than expanding existing grids.

To tackle a second major energy barrier, namely the structural inadequacies of sub-Saharan African energy markets, such as monopolistic ownerships with difficult market and grid access for new actors and innovation, the UNEP report says governments should reform the energy sector with policies leading to a higher level of decentralisation and easier market access for new energy producers.

“These reforms would encourage third parties and private sector independent power producers (IPPs) to enter the renewable energy market and contribute much needed specialised technical skills,” experts that worked on the report opine.

A third major roadblock to the development of renewable energy utilities, says the study, are the risks – political, regulatory and commercial – present in many sub-Saharan countries, adding, while complex, these risks can be abated and their impact lessened by the use of risk-mitigation instruments already available, albeit insufficiently, today.

The study thus recommends that the international community should put in place international risk mitigation instruments with an explicit climate change mandate.

For his part, Kandeh Yumkella, Director-General of the United Nations Industrial Development Organisation (UNIDO) and Chair of UN Energy, said “Reaching the goal of sustainable energy for all in Africa – and beyond – will require action by all countries and all sectors to shape the policy and investment decisions needed for a brighter energy future”.

“Industrialised countries must accelerate the transition to low-emission technologies. Developing countries, many of them growing rapidly and at large scale, have the opportunity to leapfrog conventional energy options and move directly to cleaner energy alternatives that will enhance economic and social development,” he added.

Also making a comment at the launch in Nairobi, Adnan Z. Amin, Director-General of the International Renewable Energy Agency (IRENA), stated, “In this, the UN International Year of Sustainable Energy for All, many countries in Africa are already successfully testing the technologies and policies needed to bring energy to rural areas and growing cities”.

According to him, “Innovative investment mechanisms and sharply falling manufacturing and installation costs of renewable energy technologies, including wind, advanced biomass, and solar power, are essential to further unlocking the continent’s vast potential,” while “Smart government policies can accelerate the quest for more sustainable sources of energy in Africa and improve millions of lives across the continent”.

Adding his voice, Erik Solheim, the Norwegian Minister of the Environment and International Development, stated, “Private sector development is essential to create more growth and less poverty. It will contribute to the huge need for investments in Africa. We must mobilise access to modern energy services, women’s participation in working life and economic growth”.

At present, eight African countries already have national renewable energy targets in place, including Mauritius (65 per cent by 2028), Cape Verde (50 per cent by 2020) and Cameroon (50 per cent by 2015), goals the UNEP report says are a “critical component” of any renewable energy policy package, as they provide clarity to private sector actors and can support the mobilisation of investment.

On the other hand, UNEP’s Green Economy report shows how the cost of renewable energy services would be even more competitive if the negative, indirect impacts associated with fossil fuel technologies were taken into account.

Currently, some African countries, including Kenya and Senegal, are devoting more than half of their export earnings to energy imports, but  the Green Economy report says scaling-up renewable resources that are available domestically, could enhance national energy security, while mitigating the public health risks caused by the mining, production and combustion of fossil fuels.

Such risks include the inhalation of smoke from traditional cook stoves used in households across Africa according to available reports which say these indoor emissions are responsible for an estimated 1.9 million deaths worldwide each year, while ‘black carbon’ produced by the stoves is also a major contributor to climate change.

By Edmund Smith-Asante