Africa is essential to the world’s food and energy future. But winds are not blowing in its favour.
Food security and energy security go hand-in-hand. Today’s energy crisis has led to increased power, fertilizer, and food prices, hitting the most vulnerable populations the hardest.
Yara recently told E24 that part of the solution lies in Africa, where, if we manage to commercialise the continent’s agriculture industry, we can solve both food security and the climate crisis for the continent.
We believe renewable energy also has a big role to play in Africa, both in terms of reducing energy costs and providing energy security.
Food insecurity and the catastrophic effects of climate change are driving demand for clean and green energy in Africa. While Africa may not be the primary perpetrator when it comes to emissions, it is shouldering a large portion of the climate change burden.
Renewable energy has been pointed to as the best way to alleviate climate change fallout, offer greater energy security, and simultaneously close Africa’s persisting energy gap.
And at Scatec, we believe that Africa has the potential to be a global leader in terms of renewable energy production.
Why Africa?
- Generous supply of wind, sun, hydropower, and even geothermal resources
- Rapidly growing energy demand and an energy gap yet to be closed
- Increasing cost competitiveness of renewable energy
- Less fossil legacy to replace and more opportunity to build new
- Improved policy frameworks and ample opportunity for investors
- Low-cost clean energy as basis for export-oriented industrial activity
What’s the hold up?
It’s a context that could be the breeding ground for the world’s next renewable energy leader – perhaps the first continent to be 100% renewably powered even. But at present, winds are not blowing towards Africa. BloombergNEF reports that new capital for renewable power projects has hit an 11-year low.
Where does Africa go from here?
Michael Bloomberg put it best when he said that changing the current clean energy investment levels in Africa requires “new levels of collaboration to identify viable clean energy projects and bring more private financing and public support of them – so we can turn Africa’s potential as a global clean energy leader into reality.”
We couldn’t have said it better ourselves. Public private partnerships will be crucial to unlock the renewable energy potential of the continent.
This is about seeing Africa as central to our climate solutions – food and energy included. Africa has the potential to lead the way in the clean energy transition, but support and long-term commitment is required to accelerate the development. That’s what it will take to truly light up Africa.
Can concerns about renewables reliability kill our climate progress?
Not if we can help it.
In the New York Times Climate Forward newsletter (from 26 Oct.), Ivan Penn writes: “A common refrain from people opposed to renewable energy sources like solar and wind is that they aren’t reliable, because they only generate power when the sun shines or the breeze blow.”
Penn says that the good news is that the complaints haven’t been effective in hindering growth. Case in point, in 2021, renewables made up 81 percent of new electricity capacity (IRENA).
But in a world where energy prices are on the rise, inflation pervades and geopolitical power struggles ensue, are we at greater risk of letting short-term concerns trump long-term gains?
Let’s get our facts straight about renewable energy and reliability. Here are 5 things to remember:
- A power grid, no matter the power source, must manage variability. And no power source is 100 percent reliable.
- A diverse supply of power sources and a flexible grid system to manage multiple sources can reduce our energy-related vulnerabilities significantly.
- A mix of wind, solar and hydro can be a powerful combination, as their feedstock (the sun and wind) is free and limitless.
- The intermittency of renewable energy can be solved through energy storage solutions, such as batteries, as well as high-capacity transmission lines to bring the energy where it’s needed, when it’s needed.
- Costs of renewable energy have dropped significantly, “making it the cheapest form of power today,” according to IRENA. European solar and wind generation in the first half of 2022, alone, avoided fossil fuel imports of at least USD 50 billion.
Transitioning our energy systems is not an overnight fix, and we see that many of today’s power grids require investment and upgrade to make it happen. This requires time, money, support, and, not in the least, commitment from both public and private sector to both build out renewable infrastructure and support grid advancement.
Securing this commitment is part of what COP27 is all about. We can see the solution to our climate crisis, and we know what it will take to get there. It’s just a matter of using the time we have left wisely.
We must secure the investment (estimated at $4 trillion per year until 2030 per the U.N.) and support (developed nations helping developing ones) required and commit to it until we succeed in the complete decarbonization of our energy systems.
The U.N. Secretary-General, António Guterres, put it best when he said: “Renewables are the only path to real energy security, stable power prices and sustainable employment opportunities.”
Moving from pledges to implementation – Scatec at UN Climate Change summit
The 2022 UN Climate Change Conference, more commonly referred to as COP27, is right around the corner and will be the 27th UN climate change summit, held from 6-18 November in Sharm El Sheikh in Egypt.
The climate conference offers an opportunity for the world to come together to help save our planet from reaching its breaking point. And we literally have no time to lose. The theme of this COP will be to move from pledges to implementation, giving the commitments made by heads of states across the globe meaning.
At COP, Scatec will be discussing the overall climate crisis, the key role renewable energy including green hydrogen needs to play, especially in emerging markets. If the world is to succeed with the green transition globally, we’re going to need a massive scale up of renewable energy solutions across technologies. We’ll be discussing innovative green financing solutions to attract more green investments to emerging markets, as well as EU-Africa partnerships to finance clean energy solutions.
We’ll be looking into the role of national governments to help attract more investments and to help bridge the financing gap. We’re looking forward to being at COP to discuss these issues with governments and institutions, and to play our role in the green transition.
Fossils may still dominate, but renewables are quickly catching up
COP27 is right around the corner, and its timing is critical.
The world is at a crossroads, with projections of pessimism growing as the world faces an energy crisis, food shortages, record inflation and a war on European soil. Amid these challenges, both IRENA and the IEA have released new reports showing that there is light at the end of the tunnel – that is, if we manage to maintain and accelerate our progress.
Earlier this year, IRENA reported that renewables made up 81 percent of new electricity capacity in 2021, with solar power leading the way.
Just recently, the World Energy Outlook from the IEA took a more optimistic approach, indicating that higher shares of renewables were correlated with lower energy prices, and that new policy measures are helping to propel the spread of clean energy.
The IEA and IRENA reports are promising signs that we are getting our energy systems on track, and yet we are still at the start of this long and complex journey.
“At Scatec, we are no stranger to the complexities of the energy transition and the massive effort it requires to shift to renewable energy sources. It’s an opportune time for COP to be held in Africa, as we see Africa as key to this transition, given its enormous potential as a clean and affordable energy producer,” says Terje Pilskog, CEO, Scatec.
Pilskog will be present at COP27 and is going to speak on a panel at the Climate Parliament Luxor Forum, a precursor to the main COP event. The aim of the Luxor Forum is to create a dialogue between lawmakers, donor agencies and the private sector, focused on building a new clean energy system for the world.
As part of a renewable energy panel on 5 November, Pilskog plans to address the Luxor Forum audience about the need to build out large-scale wind and solar energy in places where this energy is needed most, to enable greater access to affordable, reliable, and clean sources of power.
It’s time to double down on our renewable energy efforts
“Costs of renewable energy are dropping, and capacity is going up – just about everywhere. We have reached a critical point in time, and rather than be content with where we are, I believe it’s time to double down on our efforts and use this momentum to continue transition our global energy systems even faster and at greater scale,” says Pilskog.
The three most critical steps for Africa in a climate changing world
In 2010, a small Norwegian solar company saw opportunity to launch a renewables journey in South Africa. What started on the southern tip of the African continent has now grown to include Mozambique, Egypt, Tunisia, South Sudan, Uganda, Chad and Cameroon, the countries where Scatec and its partners are working to spread the benefits of clean and affordable energy.
Renewable energy is one of the undisputed solutions to climate change. As emerging markets grow and develop, both population-wise and economically, so will their consumption of energy. Setting a strong, green energy foundation now, as the region transforms, is essential for achieving global climate goals. It’s also a chance to create new opportunities for these economies, and most critically, to ensure greater access to energy.
“We believe that renewable energy has a major role to play in emerging markets like Africa’s future. We also see that these locations have the potential to create a thriving industry geared towards the decarbonization of transport, heavy industry, and other hard-to-abate areas with producing green hydrogen and green ammonia, which is one of our key strategic growth missions in Scatec,” explains Terje Pilskog, CEO, Scatec.
Scatec’s Strategy: Develop, build, own, and operate renewable energy in emerging markets.
- Advance Green Hydrogen
According to Barings: “Green hydrogen provides a wide array of opportunities for emerging markets; from a national security standpoint and sovereign decarbonization strategy, using green hydrogen can displace imported fossil fuels (coal, diesel, and natural gas), reducing exposure to market prices and potentially reducing energy costs.”
It’s an opportunity that Scatec sees as well, which is why the company is investing in green hydrogen in strategic regions – such as Egypt and Oman. These will mark Scatec’s first green hydrogen projects globally. Scatec will own and operate the facility as the majority owner and considers this project a critical first step in developing a green hydrogen hub in the region.
The build out of a green hydrogen industry in emerging markets is part of Scatec’s strategic initiative called “Green H2”. This is the company’s drive to develop industrial projects that support carbon reduction in industrial processes.
“With the right partners and the right investment, we see Africa and the Middle-East as a natural place for a green hydrogen economy to develop,” says Pilskog.
- Grow Renewables
Recently the US and the EU announced increased collaboration to boost sustainable energy in Sub-Saharan Africa. The two nations identified Africa’s abundant renewable power potential and well as the need to improve local access to clean energy sources as key rationale.
The EU has long been a supporter of Africa’s green energy journey, most recently with the launch (2021) of the Africa-EU Green Energy Initiative to support increased renewable energy capacity across the continent. This initiative involves partnerships, funding, as well as the work to ensure the right regulatory environment and incentives for investment. It’s a promising sign that Africa has strong supporters in its corner as it embarks on a massive energy transition.
“Scatec and other clean energy companies like us see Africa’s enormous potential to be a renewables superpower. International co-operation is vital to succeeding, and the combination of the public and private sector working together can be a powerful force for change,” says Pilskog.
- Optimise Portfolio
At COP26, developed nations committed $100 billion annually in climate financing for developing nations, a commitment that remains unrealised. While global investments in renewable energy continue their rise, spending in emerging markets is slipping due to increased risk-aversion, according to BloombergNEF (BNEF).
To get to where the world needs to be by 2050, the consensus is that much more capital must be mobilised, everywhere. Claire Curry, head of technology and innovation at BNEF, said to Recharge News: “It is true that we have solutions ready to deploy today, but there is still the need for continued innovation. All forms of corporate finance will play an important role in helping develop and scale climate-tech in the coming decade.”
To avoid a scenario in which emerging countries become the “major fault line” in the efforts to reach global climate goals, as the IEA describes it, then it’s going to take a mix of public and private funds, and greater willingness to take on short-term risk to help these societies make sustainable gains.
Scatec’s commitment to Emerging Markets continues
Scatec is putting much of its investment power into emerging markets including Africa. The company has a strong history on the continent and has been open about its commitment to supporting the energy transition here.
“We are focused on markets where we can make the most impact and create value,” says Pilskog. “We are planning for further growth and investment, as well as strong collaboration with key partners as we support the continent’s energy transition.”
It’s Africa’s turn to drive the climate conversation
The world has grown even more unsettled since COP26 in Glasgow. War, record inflation levels, and escalating energy and food crises bear down on the global population as we approach the tail-end of 2022. But climate change doesn’t rest, and neither does the UN Climate Change Conference of Parties.
This time the attention is on Africa, the host continent for the COP27 negotiations taking place in Sharm El-Sheikh, Egypt in November.
The realities of climate change are hitting Africa hard. It was a topic addressed at COP26, when developed nations committed $100 billion annually in climate financing to emerging and developing economies.
Unfortunately, this promise has not yet been realised, according to Mr. Ephraim Mwepya Shitima of Zambia, the Chair of the African Group of Negotiators on climate change.
Shitima expresses concern that in a world facing crisis on many fronts, our attention is drawn away from climate obligations, namely climate finance. He emphasises that the current geopolitical situation should not lead to lowered expectations.
Scatec’s CEO, Terje Pilskog agrees, as without African countries on a course towards net zero, the world will fail to meet the targets set in the Paris Agreement.
“The African Group at COP27 aims to advocate for urgent climate action in Africa – specifically ‘tangible, implementable outcomes.’ And we believe that these outcomes can be achieved by greater investment into renewable energy through Africa, sooner rather than later,” he says.
Africa’s rapid development must be powered by renewable sources
The transition to renewable energy has been proclaimed by IRENA and others as a key climate solution. Fossil fuels are the largest contributor to climate change, and to avoid catastrophic outcomes for our planet, we need to reach net zero emissions by 2050.
“While Africa is not home to the world’s largest polluters, its countries comprise rapidly growing populations and advancing economies. Making the investments today into cleaner and greener sources of energy ensures that Africa’s development will happen in parallel to meeting our global climate change goals, rather than working against them,” says Pilskog.
Africa’s energy demands are expected to triple by 2030, according to the IEA. It’s a continent that is well suited for renewable energy generation, with ample sun, wind and hydro opportunities.
“Investment in renewables will not only help Africa meet its growing energy needs in a more sustainable way, it will also stimulate economic development through new infrastructure, new sources of employment, greater opportunities for innovation, and better quality of life,” adds Pilskog.
Africa is ideally positioned to be a renewable energy superpower
The renewable energy journey in Africa has already begun, but it still has a long way to go. According to the World Economic Forum, nine per cent of all energy generated in Africa came from renewable sources (in 2020). The number of projects is surging, however, as the energy industry eyes opportunity.
Africa is home to 60 per cent of the best solar resources globally, yet it only has 1 per cent of installed solar PV capacity, which is “already the cheapest source of power in many parts of Africa” according to the IEA’s Africa Energy Outlook 2022.
In addition to its renewable energy potential, Africa is also exploring sustainable ways to meet energy demand in the hard-to-abate sectors of society, such as transport and heavy industry. Green hydrogen has emerged as a promising means of establishing energy security and positioning Africa a first mover in the green hydrogen value chain, to supply its own countries and for export purposes.
“Development of large-scale green hydrogen production is happening in Africa. There’s so much potential, and no time to lose,” adds Pilskog. “We believe that green hydrogen could be a turning point towards achieving our global climate goals.”
The renewable energy turning point for Africa
Africa’s net zero future will no doubt play a leading role in this year’s COP27 negotiations. The African countries are in need of greater energy stability, especially amidst rapid development, and it will be critical that their growing needs are met by clean and green power sources.
As the global climate community descends on Sharm El-Sheikh for another intense round of climate discussion and deal-makings at COP, it’s critical that we send a strong signal to developed nations that we must keep our promise to Africa, urges Pilskog.
“Our investments in Africa ensure that the scales are balanced as we work to decarbonize our world. The energy crisis is not only being fought in Europe and the U.S., and it’s up to the delegates at COP to see the potential that we must drive the clean energy transition in this critical part of the world and take action to ensure that the African countries fulfil their energy potential.”