Dentons organized a conference entitled “Investing in Africa: Key sectors” at the MEDEF (the largest employer federation in France) conference hall in Paris.
Partners from Dentons and professionals with experience in Africa collaborated on four panels including: Infrastructure, Energy and Natural Resources, Capital Investment and Life Sciences, establishing an overview of the issues and opportunities that Africa offers in these key sectors.
“The energy sector cannot develop without infrastructure” stated the Energy/Natural Resources panel, which was moderated by partners Ramin Hariri and Vincent Lacombe, both focusing on tax matters, in particular in the energy sector.
Composed of representatives from Total, EREN, as well as an ex-Minister of Mines of Mali and Anne Lauvergeon, Chairman and CEO of A.L.P S.A., the panel discussed the main challenges of clean Energy in Africa.
The weight of Africa in emissions of CO2 and greenhouse gases is low
The African continent—except South Africa—has by far the lowest contribution to greenhouse gases emissions in the world: less than 10 percent of global volume. The volume of CO2 emitted per capita per year is less than 1t, while the United States and Russia reach, respectively, 18t and 13t per capita and per year.
The reason lies in low electrification rates (only seven African countries—Cameroon, Cote d’Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa—have a rate of access to electricity reaching 50 percent. The other countries rate of access is below 20 percent) and low levels of industrialization.
Nevertheless, the Summit of Marrakesh in April 2015 showed a very strong involvement in the COP21 to be held in Paris. African ministers of energy and environment together called for strong support of Paris 2015 and the expected engaging and binding agreement.
All energy sources are needed: in the global energy mix, switching only 1 percent of produced energy from coal-generated to gas-generated would require an increase of 11 percent of renewables to achieve the same level. Africa can build such an energy mix.
From this point of view, Africa can build an energy mix and expand its existing productive apparatus, develop its natural resources with little carbonized methods.
The three main challenges for clean energy in Africa
Financing of major energy infrastructure without CO2 emission is a challenge. Whatever the type of infrastructure (not just energy) or country (industrialized or emerging), financing is the key. It is becoming increasingly difficult, including for rich countries, to finance important infrastructure such as power plants (including nuclear power plants, dams large-scale and off-shore wind farms).
Decentralization of electricity generation
The old development model was based on two pillars—strong power generation tools and an efficient grid to distribute electricity. This model is not applicable to Africa as it often appears to be too expensive and not efficient enough. There is a huge potential in developing off-grid solar lighting in Africa. With the fall of commodity prices and photovoltaic panels, the number of rechargeable solar lanterns sold in Africa is growing exponentially. The latest report of the World Bank Lighting Africa shows that 28 million solar lanterns have been sold in Africa between 2013 and 2015. This is double the amount expected in 2010 when the program began.
Multinationals are evidently interested in this market, with Total, for example, and its subsidiary KES, installing solar kits for homes not connected to the network in South Africa.
Innovation is a major challenge for all countries in the world, including Africa, as it affects their management of resources both in terms of energy efficiency—intelligent networks, management guided by demand, use of connected objects to optimize both demand and supply—and energy storage.
Of course, these are the issues to be addressed through the INDCs, as discussed in the London panel reviewed in the preceding section.