August 15, 2014

#MasterEnergy: #Africa is "resource rich but modern #energy poor" @TheEIU_Energy

"Roughly 60% of Africans lack access to electricity"

Despite Africa's prodigious resources, many Africans live in energy poverty. Massive investments will be needed to end it.

Africa has rich energy resources, with 8% of the world's proven oil and natural-gas reserves. This is without considering alternative sources such as hydropower (generated using the waters of the Nile River, for example) or its solar potential (think of the deserts of North Africa). Yet roughly 60% of Africans lack access to electricity; about 70% have little choice but to use health-harming firewood or other biomass for cooking. As the International Energy Agency (IEA) observes, Africa is "resource rich but modern energy poor".
One problem is the uneven distribution of Africa's resources. Eighty-five percent of proven oil reserves lie in just a few countries: Algeria, Libya, Nigeria and Angola. Over 90% of Africa's gas is found in Algeria, Libya, Nigeria and Egypt. Underinvestment is another barrier. The IEA estimates US$385bn would be needed to provide universal access to electricity in Sub-Saharan Africa by 2030.
Given the constraints, how quickly will African energy demand grow? With oil production concentrated among a few big exporters, most states will have to turn to imports. African oil consumption will expand by little more than 1% per year until 2035, according to the IEA. Gas is a different story. Large new discoveries in Mozambique and Tanzania (see infographic; click here for the full-size version) will help the continent's gas production to double by 2035. This new output will go towards supplying Asia's hunger for liquefied natural gas (LNG). But Africa's own gas consumption will also expand robustly, growing at 2.6% per year as demand from the electricity sector picks up.
Still, if all Africans are to gain access to a reliable stream of electricity, attracting greater investments will be vital—and not just in extending conventional grid infrastructure. Building off-grid power plants (wind and solar farms, for instance) and improving energy efficiency are also important aims. Eventually, an electricity trading system will be needed so that energy-rich states can profit from supplying their neighbours.
Working in Africa's favour are not only humanitarian concerns but—thanks to rapidly ascending economies in parts of the continent—the profit motive. On August 6th, Sweden, the World Bank, and the US government and US corporations announced billions of dollars of new investment, much of it for the energy sector under the US's Power Africa scheme. Much more will be needed.

Read the article online at the The Economist Intelligence Unit @TheEIU_Energy here:

Click here to view the infographic, published as part of a programme sponsored by GE.