Tag Archive for: Energy

Nigeria’s chronic power shortages have been a defining feature of the country’s path to sustainable economic development.

As an oil-producing net importer of petroleum products, this makes the lack of investment in Nigeria’s own domestic energy infrastructure even more stark – a trend which must be reversed.

Currently, peak power supply is a quarter of the total 20,000MW demand in the country. With electricity generation per head 25% below sub-Saharan African averages, the country spends $12bn annually on diesel to power generators. This cost comes with additional health and environmental hazards, highlighting the importance of developing a sustainable, reliable energy mix.

Economic productivity is severely impacted because of inconsistent power supply. Its resulting cost to the economy is estimated at $29bn annually. In the context of an anticipated COVID-19-induced recession forecast to be the worst in four decades, there is an urgent need to act.

The gas sector offers a more environmentally friendly alternative than oil. Policy implementation in the shape of the Nigerian Gas Transportation Network Code (NGTNC) illustrates a potential future of an equitable and competitive gas market. Better infrastructure and broader access to gas across the country can have a considerable impact.

Most importantly, these steps open the door to increased investment. Where private sector participation had previously been muted, there is currently an uptick in activity. A healthy proportion of this has been directed to development of midstream assets, and with the influence of the NGTNC the sector’s potential will increase.

New Investments

African Infrastructure Investment Managers (AIIM) sees value in this, as reflected in our recent activity through our pan-African AIIF3 fund. By acquiring stakes in Savannah Uquo Gas and Accugas, [Nigeria is] invested in an integrated gas midstream business.

Accugas has 260km of pipeline network and a gas processing facility, critical to realizing ambitions of being Nigeria’s gas supplier of choice. Accugas is currently responsible for supplying gas to around 10% of the country’s power generating capacity. Assisting this process are shifts in policy which are helping direct gas production towards domestic demand.

Given that most of Nigeria’s power demand today is fulfilled through diesel based self-generation, significant opportunity also lies in solutions which help the switch from high-carbon, high-cost generating capacity to low-carbon, low-cost alternatives.

[Nigeria has] also invested in Starsight Power, a rooftop solar company which has become one of the leading commercial and industrial solar power providers in Africa. It has a portfolio of over 35MW of generation assets installed in Nigeria and Ghana. This model encapsulates Nigeria’s future energy and economic ambitions, harnessing the vast potential of our solar resources, while reducing reliance on the nation’s primary commodity.

Increasing utilisation of lower carbon emitting fuels and energy sources speaks to a future which considers sustainable growth and the lives of generations to come. A warmer climate and less predictable rainfall are having deleterious effects on many communities, especially those whose livelihoods rely on rain-fed agriculture. Climate change is driving displacement across these communities, impacting millions and compounding issues food security issues.

Solar Power

Achieving inclusive and sustainable growth will mean fully embracing alternative, cleaner energy sources. In a country where 43% of people are living off-grid, options like solar mini-grids bypass the need for installation of transmission infrastructure, bringing down costs and delivering power at affordable rates. Technology developments also mean such options are widely deployable and rapidly scalable.

Despite modest uptake, there is growing momentum towards commitment to a more sustainable future. In August, the government released eight tenders for solar power projects, which will be followed by a US$200m mini-grid development initiative from the African Development Bank. The World Bank has also pledged its support for the second phase of Africa’s largest off-grid hybrid solar project, the Energizing Education Programme.

 

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The future of South Africa’s energy supply could be shaped by a cash injection from the United States of America. The government, in their ongoing discussions with NEDLAC and foreign investors, has entertained the idea of letting an international development firm finance and build a new nuclear power plant in South Africa.

As Bloomberg has confirmed, The US International Development Finance Corp (DFC) has signed a letter of intent to support plans laid out by NuScale, an American technology group that are ready to kick on with this project.

Amongst the billions of dollars they’ve pledged to South Africa, a ‘secure, reliable energy supply through the construction of new nuclear plants’ is their major priority.

The DFC released a statement last week, confirming that they would be pioneering in their ambitious blueprint. Should a new nuclear plant get the green light, this would be the first IPP funded by the USA throughout the whole of Africa.

“If the United States International Development Finance Corp is successful, NuScale would be the first U.S. nuclear energy IPP on the continent and would help support energy resilience and security in one of Africa’s leading economies.”

– Statement from the DFC

It’s understood that the DFC would go further than just building a new nuclear power plant in South Africa. It’s reported that their investment would plough billions into private infrastructure and public transport ‘between now and 2022’:

  • The construction of a billion-rand plant tops their agenda, providing a further 2 500 megawatts of power in South Africa.
  • The DFC has signed a letter of intent to support NuScale’s bid for South Africa’s independent power producer program.
  • The draft envisages R23 billion ($1.4 billion) being allocated to galvanize private investment in infrastructure.
  • A further R4.5 billion would be spent on public transport development over the next 12 months.

 

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According to the Government Gazette, South Africa will allow municipalities to source their own power rather than buying electricity solely from the state-owned utility, potentially easing a dispute with its second-biggest city, Cape Town.

Earlier this year, a judge ordered further negotiations between the City of Cape Town and the energy ministry after the municipality sued the government because it wasn’t allowed to proceed with its own energy procurement plans. Under the planned rules, the local authority would still need government permission to do so, which it objects to.

In addition to wanting to generate more power from renewable resources, South African cities including Cape Town, Johannesburg, the adjacent industrial hub of Ekurhuleni and Tshwane, which includes the capital, Pretoria, have been subjected to regular power cuts because state-owned Eskom Holdings SOC Ltd. cannot meet demand and distribution infrastructure is dilapidated.

Cape Town has outlined plans to source electricity from solar plants and waste-to-power projects at its landfill sites. Eskom produces most of its power from coal.

Leila Mahomed-Weideman, director of sustainable energy markets for the City of Cape Town, said she couldn’t immediately comment.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].