Private capital will end Africa power cuts by 2025, says survey

Power cuts in 15 Sub-Saharan African countries could become an “exception” rather than a norm in 10 years time, with private capital expected to play an increasingly bigger role, according to a survey by PricewaterhouseCoopers (PwC) released yesterday.

The survey found that 96 per cent of the officials interviewed from Nigeria, South Africa, Zambia, Kenya, Mozambique, Botswana, Lesotho, Namibia, Uganda, Swaziland, Ghana, Malawi, Rwanda, Tanzania and Zimbabwe believed power cuts will be an “exception rather than the norm” by 2025.

Africa’s installed power generation capacity is expected to quadruple to 380 gigawatts (GW) in 2040 from 90 GW in 2012, boosted by private investment, green energy initiatives and cross border energy trade, the survey showed.

Three quarters of respondents said there was “a medium to high probability that the private sector will own and operate” more than half of power-generating projects by 2025.

The investment required to improve electricity access in Africa was “immense” and the continent needed about $450 billion over the next 25 years to electrify all urban areas, the report said, citing the high cost of power projects was a concern. Respondents hoped private sector investments would help improve power production, citing that access to funding for new capital projects was a problem.

They cited a lack of regulatory change, coupled with the “failure to implement cost-reflective tariffs and overall difficulty of raising finance” as barriers to investment.

capital markets

“In Africa, the challenges of financing infrastructure are compounded by limited institutional capacity, fragmented regulatory systems and often underdeveloped banking and capital markets outside of the larger economies of South Africa and Nigeria,” the survey said.

PwC surveyed 51 senior officials from governments, power utilities, regulators and independent power producers in some of the worst affected countries in Africa, where electricity constraints cause frequent power cuts and dent economic growth.

“They felt that there are a lot of opportunities for Africa to leapfrog forward,” said PwC’s Africa Power and Utility leader Angeli Hoekstra while presenting the findings of the first Africa Power and Utilities Sector Survey.

Hoekstra said governments across the continent were hoping to take advantage of cost reductions in green energy generation. “Security of supply and affordability will remain the main areas of focus for Africa now and in five years’ time,” he said.