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Energy & Natural Resources
Africa is home to the world’s fastest growing population, which is expected to double by 2050. This growth is directly linked to the increase in demand for energy – indeed the African Energy Chamber projects that the continent's demand for power will keep rising between 4-5% per year, possibly doubling by 2050. 580 million people out of the world's 770 million who lack access to electricity live in Africa, with at least 110 million living in close proximity to existing grid infrastructure.
A reversal of fortune for the world’s unelectrified population is one of the Sustainable Development Goals of the United Nations (SDG7). African governments have traditionally relied on centralised grid expansion to improve electricity access. This requires significant capital expenditure and is often not time or cost effective, especially in rural areas where much of Africa’s unelectrified population live. At the same time, the Paris Agreement enshrines the global aim to achieve Net Zero in the next 3 decades in order to meet the goal of keeping global temperature rise well below 2 degrees Celsius above pre-industrial levels. Taking into account its population growth and rising middle class with increasing purchasing power, it comes as no surprise that out of Africa's 54 countries only South Africa has set a Net Zero target. However, meeting the continent's increasing energy demand in a way that is compatible with global decarbonisation efforts may not be as unsurmountable as it seems. Between 2014 and 2019, 20 million people on the African continent gained access to electricity, outpacing population growth, while in Kenya the access rate rose from 20% in 2013 to almost 85% in 2019. These figures signal a brighter future for the continent.
Africa has the richest renewable solar resources, of which only 1% has been tapped. There are numerous obstacles to widespread adoption of this zero-carbon solution to the continent's increasing energy demand, including lack of investment into the power supply industry. Indeed in 2019, Africa accounted for just 4% of global power supply investment. The reasons behind this are varied, yet technological barriers to large-scale solar adoption are identified as one of main issues.
Artificial intelligence (AI) and machine learning (ML) have the potential to remove these technological barriers and enable data-driven investments and policy-making. In Nigeria, NGO Renewable Africa 365 is harnessing the power of AI to bring renewable energy to 100 million people living in communities without access to the national grid. It has been developing a grid coverage analysis and ML-driven heatmaps to identify sites that are most suitable for solar panel installation. Combined with an interactive map of top Nigerian regions with a high demand for electricity, these solutions connect the power supply to the demand locations, remove inefficiencies from a long and complicated energy supply chain and promote data-based certainty for risk-aware investors. Such technology, when considered in the context of microgrid energy systems, could serve as a powerful tool in achieving green electrification across Africa.
A typical microgrid can be installed and operational in as little as two months and run on 100% clean energy. The Annobon Island Microgrid is an example of success in this area. Annobon island, off the coast of Equatorial Guinea, has a population of 5000 residents who previously only had reliable electricity for up to five hours per day and spent an average of 15-20% of their income on supplemental power. The government of Equatorial Guinea contracted MAECI Solar and Princeton Power Systems to install a 5-MW solar microgrid system on Annobon Province. The solar microgrid, which supplies enough green electricity to meet 100% of the island’s current energy demand, features 20,000 solar panels, system integration, an energy management system, remote control/update capabilities and battery storage.
The World Bank recently released a report which states that over half of the world’s unelectrified population would be most cost effectively served via microgrids. In the context of Sub-Saharan Africa specifically, it is estimated that over 140,000 community-scale microgrids will be needed to achieve universal electrification. As mentioned above, Kenya is a model for success in achieving electrification. Notably, a recent report by I-Dev International states that it would not be possible for Kenya to achieve 100% electrification via extensions of the central grid; instead it advocates a build-out of renewable microgrids.
In pursuing its electrification goals, Kenya has also turned to AI. To address the intermittent nature of the sunlight as an energy resource, Kenya has used production data from a real solar power plant in South Africa to identify potential failures in solar energy supply due to, for instance, shading or dust. This AI-driven analysis enables comparison between expected ideal and a real-life scenario, which drives a more informed decision-making in terms of alternative energy source and necessary storage. In addition, to support AI-driven solutions to the increasing energy demand, Kenya was the first African country to launch an open-data portal to make information on energy among other crucial sectors available to citizens.
The widespread use of mobile money to pay energy bills, advancements in energy smart meters/management systems and battery technology, as well as significant cost reductions have transformed AI and microgrid technologies into readily-deployable solutions. However, considering falling renewable energy generation and appliance costs, investment in green electrification across Africa has been stunted.
Microgrid investments are still considered high risk because of the lack of long-term track records, challenges in evaluating community energy demand and growing it over time, and the unique characteristics of each community and project. To achieve profitability microgrids need to be perfectly tailored. Too large a system will lead to underutilisation and high per unit costs. Too small a system will forego revenue and scale effects, again leading to higher per unit costs. Innovative risk analysis, public-private funding models and payment structures may be needed in order to fully unlock the potential of what some estimate will be a $128 billion market by 2030.
Furthermore, regulation must be updated. Many Sub-Saharan jurisdictions either have no energy regulation at all, or highly outdated regulation. For example, in the current environment, a 50 KW AI powered microgrid project might be subject to similar regulatory hurdles as a large 40 MW gas fired plant project. The lack of clarity in the regulatory environment increases the perception of the risk of projects, which in turn raises the cost of investment capital.
Finally, ways of supporting investment and demand growth must be found. Organic increases in the revenue of green electrification projects have been slow. This is not surprising given the target market is some of the world’s poorest and least energy-intensive communities. Microgrid operators might consider proactive solutions to increase revenues, for example, by selling or leasing appliances or other services which interact with the microgrid. In rural Africa electric vehicles, internet/tech products, entertainment, cold storage and water services could all be bundled as ancillary grid products. Such a strategy would increase sales revenue and underlying electricity demand simultaneously as well as generate an increasing amount of data for harnessing.
If barriers to the adoption of green technologies are overcome, the potential for socio-economic advancement is huge. Communities will be able to light streets and homes or power appliances and machinery to save manual labour time. Beyond the home, farmers might use irrigation to increase crop yields and preserve produce with cold storage. Businesses will be able to use technology to connect increasingly into integrated supply chains and markets around the world. Beyond this, purchasers of renewable generation units can become 'prosumers' who produce surplus energy which can either be sold to other consumers on the micro-grid or sold to utilities and fed into the main grid.
When one considers the potential of these green and smart technologies in tandem, a seismic shift away from a centralised fossil fuel economy towards ‘energy democracy’ may come in mind. Whilst there is no singular definition of energy democracy, the concept encompasses issues of; universal access, renewable generation, some form of public/social ownership and fair pay/green job creation. Energy democracy is concerned with shifting power over all aspects of the sector including ownership, production and supply, finance, technology and users and workers. Crucially, this can all be achieved through harnessing 100% clean energy with the power of AI-enabled microgrid infrastructure.
Against this backdrop, will existing and future laws encourage or dissuade investment in microgrids, AI and similar innovative renewable energy schemes in Africa? This largely depends on the focus and efficacy of the relevant public and private domestic and international law. For example, as indicated above, a failure to modernise existing electricity regulation might hinder the development of small-scale renewable energy solutions. Conversely, modernised and effective intellectual property protection, a robust and fair judicial system for debt collection and dispute resolution, and investor protection laws to protect against expropriation and unfair treatment will encourage international investment in such schemes. Such legal frameworks make securing funding, insurance and the investment decision itself all the more easy, and enable such schemes to become a reality.
Small-scale, decentralised renewable energy schemes, enhanced by AI and other technological innovation, hold the promise of bringing electricity to some of Africa's communities who need it most. This is crucial to achieving energy justice in Africa, and to the world achieving its Net Zero goals. However, if this dream is to become a reality, proper domestic and international laws and regulatory systems need to be in place to support a strong political will and investors who are willing to take a risk in such "green" investments.
 A micro-grid is a self-sufficient energy system that serves a discrete geographic area. Micro-grids include one or more kinds of distributed energy sources that produce the power supplied to the micro-grid, such as solar panels, wind turbines or biomass generators.