All is not well on the energy generation front in sub-Saharan Africa, Sadc included. TAPIWA NYANDORO
In Zimbabwe, where generation is around 50% of installed capacity due to aged infrastructure, the problem is much worse.
The region is well endowed with all natural resources to be both energy-independent and an exporter of energy as electricity and hydrocarbons.
But it is suffering from serious energy shortages owing to poor planning and lack of foresight, poor asset management, poor project execution, high levels of corruption and inadequate regional monetary, fiscal and economic integration and therefore an inability to mobilise sufficient resources that come with economies of scale.
On energy reform, it is “better to have no plan at all than a bad plan carried out with iron consistency”, said Dominic Lawson of the British Sunday Times as quoted in MoneyWeek (Issue 676, January 2014).
Germany, he noted, had a bad energy reform plan which was being implemented with typical German efficiency.
He, therefore, welcomed the fact that the European Commission “belatedly acknowledged the self-impoverishment threatened by its renewable energy policies”, and abandoned its insistence on mandatory green targets.
Germany, he added, had “revealed the full idiocy” of the existing policy.
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Charles Frank of the Brookings Institute, a think-tank, who studied the total costs of the various electric energy sources, as reported in The Economist (July 26 2014), wouldn’t agree more.
By giving massive subsidies to renewables — about $25 billion in 2013 — Germany has been ensuring that only cheap coal can compete on price.
Apparently green energy policies have cost not just the German taxpayer dear, but increasingly German industry as well. If European industry “has to pay market price for its energy – now more than double [that] paid by rivals in America — it will simply move out”.
The Union, “faced with de-industrialisation had to abandon its catastrophic ‘green policies’, and let European companies buy their energy at the best possible price”.
The above sentiments adopted by the European Commission should provide guidance to power utilities and governments in the Sadc region at an auspicious time United States President Barack Obama has made the provision of energy a key cog of his African policy.
President Robert Mugabe also hit the right note when he told the just-ended Sadc summit in Victoria Falls that there was need for mutual mobilisation of funds within the region to co-execute high return infrastructure and industrial projects to mutual advantage. The more than $100 billion 100 gigawatts (GW) Grand Inga Dam and the 1 650-megawatt (MW) Batoka Gorge Hydro Power projects are two such examples.
Humbling himself and baring his soul, he called for South African leadership and resources in such noble and transformational regional ventures.
The Sadc chairman also called for an equitable [within the region] trade and industrialisation policy that would see intra-regional direct investment, trade and job creation increased.
Signing power purchase agreements would allow the likes of Zimbabwe to grow electricity generation and export the commodity to the likes of South Africa, whose demand for energy is likely to rise to 80GW from 40GW now by 2030.
With the life of a thermal power station being around 30 years, Zimbabwe could build two to four 5 to 10GW thermal power plants with the objective of exporting the bulk of the power to regional customers, as the Grand Inga Dam takes shape.
This project, if supported by the region, would not only be commercially viable, but also increase regional trade and coal mining in Zimbabwe.
There will be the added benefit of South Africa paying in its own currency as Zimbabwe uses a multi-currency basket as its own, and is South Africa’s major export market.
Sadc seems to be in tune as regional integration of the Sadc power pool gathers momentum.
The region must not waste time in being connected to power-hungry and rapidly economic growing East Africa, in particular Kenya.
The ZiZaBoNa agreement — which is one of the Sadc region’s nine high priority energy transmission projects, this one interconnecting the electricity grids of Zimbabwe, Zambia, Botswana and Namibia, hence the acronym — should be expanded in capacity, enabling the likes of Zimbabwe to make thermal energy generation an exporting industry.
It is, however, on the massive Democratic Republic of Congo hydro project that the regional energy policies, political and economic integration must revolve.
Utilities in the Sadc region must join hands to lead the way. A joint stock multi-national company, such as the former Central Africa Power Corporation in which the utilities will hold equity, could be a Special Purpose Vehicle for the task.
The Americans with their $37 billion [aid?] offer to Africa could also come in as equity, financiers and/or technical partners. Amid the hype, caution needs to be exercised and “the tyranny of experts” avoided.
So crucial to socio-economic transformation is affordable and reliable energy that independent power producers (IPPs), especially those hawking expensive renewables, need to be shunned.
Yes, technology of renewables has advanced and costs have come down, but they still need huge subsidies to compete with thermal power, let alone hydro electricity.
The Sadc energy policies must steer clear of the idiocy of promoting an expensive input into a value chain that is already vulnerable, besides a fiscus that cannot accommodate the extra cost of the subsidy.
It was thus with some degree of alarm that I went through an Energy Infrastructure Advertising Supplement to the Mail&Guardian issue of July 25 2014.
The experts in the supplement, together with the vulture investors in South Africa’s now 4 000MW renewable industry, were calling for the unbundling and privatisation of Eskom.
That would be “idiocy”. The fortuitous cancellation by the State Procurement Board of Zimbabwe of a tender for Solar Energy provision by IPPs is, therefore, most welcome.
