DECENTRALIZED ENERGY SYSTEM: AN IMPORTANT PIECE OF AFRICA’S ENERGY PUZZLE

Date: 16 March 2018

In the past decade, a perpetual wave of economic transformation has swept over the African continent marked with drastic changes in the way we build, produce and consume. This era of rapid economic and technological change is also marked by an expanding ecosystem of Small and Medium sized Enterprises (SMEs) which are the most important drivers of growth across Sub Saharan Africa, making up more than 90% of all businesses in the region. Despite this impressive economic development, Africa represents half of the 1.2 billion people without access to electricity in the world. Indeed the 2014 PwC Africa Power & Utilities Sector Survey found that by 2040, about 530 million people (mainly dwellers in rural areas) in Sub-Saharan Africa will still remain without power even with an anticipated 77% increase in output. Accordingly, enhancing access to modern energy services in rural areas of Africa remains a major business opportunity and the key to unlocking the Africa’s sustainable energy potential.
All of these concerns point towards the need to adopt a sustainable energy system that will enhance access and improve socio-economic development in the continent. At the moment, majority of African nations depend on the centralized model of electricity generation. The centralized energy systems refers to the large-scale generation of electricity at fossil-fuel powered, hydroelectric, geothermal or wind farms often located away from end-users and connected to a network of transmission lines. This model presents economies of scale, safety and reliability. However deficiency in the majority of installed power infrastructure and frequent power outages dampen economic growth, especially through their negative effect on business activities.
On the other hand, a decentralized energy system offers several sustainability merits over this situation for a region deeply threatened by climate change and energy inaccessibility. Decentralized or distributed energy system consists of relatively small-scale generation capacities available on local basis which relies on renewable energy as primary energy source and are connected to the distribution network without relying on the high-voltage electricity transmission grid. Principally, distributed generation allows us to:
Increase the energy conversion efficiency through reduction of transmission losses. More than 9% of energy is usually lost in the transmission networks but with a decentralized model of generation, the scope to reduce loss factors in the transmission network is enhanced. This is good in the medium term and long-term because it diminishes the pressure for development of more transmission infrastructure for developing economies. Again, the smaller generation of energy has the potential of bringing down energy consumption levels in general by better supply-demand matching since consumption occurs at local scale.
Owing to the huge cost reductions that have been recently witnessed in Africa by adoption of solar photovoltaic technologies in the decentralized energy systems, for instance in Kenya and South Africa, local households and enterprises are now able to fulfill their power needs and even export surplus energy to the grid or to neighbors. This means that consumers are offered better long-term supply security and control over the environmental footprint of their energy consumption.
Distributed energy generation is also more flexible to local demand patterns for electricity. In many parts of rural Africa where mini-grids are established, the power station energy controller can deliberately supply more power to sections where it is demanded most at certain times of the day. For instance, the saloons, barber shops and cinema halls are most likely to get first priority during those days when demand outstrips the output. This is a well-coordinated exercise owing to the engineer’s understanding of the power needs in the locality. Individual households can also present their emerging power needs to the site controller for adjustments.
Decentralized energy systems such as mini-grids have the capacity to yield a major competitive advantage over centralized models of electricity supply in rural areas. This is possible because mini-grids can generate electricity promptly at a cost lower because they require less capital investments as compared to the expansive centralized grid. It is therefore easier for investors to secure resources required to establish a mini-grid in a remote location which would otherwise remain unconnected to the national grid for a longtime. The local community can also invest in the mini-grid.
Finally, the localized ownership of energy resources has the potential of generating more awareness of energy issues, thereby driving a change in attitudes which encourages efficient use of energy resources.
Despite the potential of decentralized energy in revolutionizing energy access in Africa, some hurdles still exists in the quest towards tapping its potential: Inadequate proven commercial business models that can be replicated and funding for capital investments. Poor policy frameworks also hinders adoption. And powerful individuals who have benefited from the traditional centralized system have a tendency to resist change so as to protect their ‘interests’.
In conclusion, the one thing that is relatively certain is that decentralized energy has the capacity to expand energy access in Africa and therefore change the lives of about 600 million people. However, we are not sure of how the Africa’s energy landscape will look like in the 20 years but at the moment, indications are that the emerging decentralized model will enhance access, lower the cost of new infrastructure, and improve competition and energy efficiency.