According to The Economist in a special report in 2020, by the middle of this century the population of the African continent will have doubled, reaching 1.7 billion people by 2030 and making up a quarter of humanity by 2050. Alongside this demographic increase, the rate of urbanization is also set to rocket: by the end of this decade half the number of people in Africa will be concentrated in large urban areas.
Inevitably, this trend will pose important challenges in Africa from an energy perspective: currently the continent is responsible for a mere 6% of global energy consumption and less than 3% of electricity consumption.
In particular, the availability of electricity today is concentrated in the northern part of the continent and the extreme south, while 580 million people are still not connected to the distribution grid.
Considering the continent’s demographic growth, the resulting economic development required and the fact that demand for electricity will see sustained growth all over the world, the role of electricity infrastructure, and in particular electricity distribution grids, becomes even more crucial. This is not only in terms of accessibility but also from a perspective of service reliability and technological development.
The challenge of grids and the value of investment
The route to providing access to sustainable, safe and just energy can only be plotted through the development of renewables and the extension and upgrading of distribution infrastructure. This, however, requires adequate levels of investment, which are currently lacking in various parts of Africa.
The public sector is struggling to find the resources necessary for these investments due to their high-risk profile and the financial instability to which the continent’s public utility services are particularly subject.
At the same time, the contribution to investments from the private sector is limited: according to recent estimates by the World Bank, out of a total of 43 billion dollars invested by the private sector in the last twenty years in Africa, only 2% went to electricity grids.
The Grids4Africa project
This is the context which saw the creation in 2021 of the Grids4Africa program, an initiative by the RES4Africa (Renewable Energy Solutions for Africa) Foundation that aims to foster debate – not only from a technological perspective but also a regulatory and institutional point of view – to support the development of reliable, sustainable and technologically advanced electricity distribution infrastructure. The initiative is intended to aid the definition of a context that’s capable of attracting the investment necessary for the energy transition and sustainable development within a scenario that is complementary to the actions of RES4Africa, which are designed to incentivize the adoption of renewable sources to satisfy the rapidly growing demand for energy.
Enel is supporting the Grids4Africa initiative with the aim of contributing to infrastructure development following other successful initiatives that have already been carried out in regions such as Latin America.
Grids4Africa so far
The official launch of Grids4Africa took place on July 15, 2021 with an event that saw the involvement, alongside Enel, of various companies from the sector, organizations and international agencies.
The starting point for the debate was the awareness of the role of electricity infrastructure in sustainable development and the energy transition: this is amplified in Africa, a continent with low levels of access to energy and poor service quality, in net contrast to the needs of the population and the substantial rates of development forecast for the coming years.
Within this scenario electricity grids are the backbone of current and future energy systems, and they are indispensable for supporting the economic development of every productive sector.
A second important event was held on November 30 when the results of a study by RES4Africa in collaboration with PwC (PricewaterhouseCoopers) on the topic of private sector investment in grid infrastructure was presented. “42% of the African population is still without a connection to the electricity grid, and people who do have one tend to make very limited use of it. The poor performance of the electricity service is estimated to be responsible for reducing GDP by between 2% and 4% each year,” explained Jasmina Hodzic, ESG Climate Change Manager at PricewaterhouseCoopers. Hodzic went on to describe a vicious circle that has established itself on the continent, according to which, “on the basis of the 10 countries examined, energy losses from the grid varied between 10% and 29%. The poor quality of the service results in clients refusing to pay or terminating their contracts, and this exacerbates the financial stress and insufficient investment in utilities. Each of these factors is both a cause and a consequence of the current unsustainability of the continent’s grids.”
Antonio Cammisecra, the Enel Group’s Head of Global Infrastructure and Networks, and Marcelo Castillo, the Group’s Head of Business Development Global Infrastructure & Networks, on the other hand, spoke about the possibility of creating a virtuous circle. “Economic prosperity and sustainable progress in Africa mainly depend on access to reliable and accessible energy. This requires substantial investment in the continent’s electricity infrastructure, which is only possible by encouraging models of participation by the private sector and defining a collaborative and transparent regulatory framework,” explained Cammisecra.
“Under these conditions, the private sector can play a leading role, working alongside public institutions, contributing to Africa’s sustainable growth and the development of the grids,” added Castillo. “The value chain begins with greater accessibility to an innovative and efficient infrastructure that offers quality service capable of achieving sustainability in terms of both the integration of renewable sources and the development and management of that same infrastructure.”
Sustainability is in fact the decisive element for the development of infrastructure that integrates harmoniously with the local context, fostering openness and dialogue with all stakeholders. In all the countries where we are present, we have numerous projects aimed at promoting economic and social development. One such example is the project created in Bogotá in Colombia where Enel-Codensa built and put into operation the Compartir electricity substation and the connection lines required to satisfy the growing energy demand for the planned infrastructure and urban planning projects in the south of the city. In addition to building the substation, numerous initiatives are planned, not only for actively involving the local community, with the goal of raising awareness and guiding citizens towards the efficient use of energy, but also for creating economic development opportunities for local businesspeople through training courses. In Peru, through the collaboration with the Pachacutec Foundation, youngsters from disadvantaged areas are offered study pathways to train to become grid technicians who can then find employment with Enel or our contractors. What’s more, in the countries where we operate, we are developing programs for an aware and safe use of energy, thereby ensuring quality service for everyone, in addition to supporting isolated and economically challenged communities.
“The model that we aspire to in Africa is the one that has worked very well in Latin America,” added Castillo, “which represents a successful public-private partnership thanks to the creation of the necessary conditions for attracting investment and involving private operators in the development of distribution grids. It’s a tangible demonstration of the contribution that a large international operator like Enel can make towards providing universal access to energy.”