Higher economic growth to fuel energy consumption in Africa

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AFRICA’S energy consumption is set to rise in the coming years on the back of higher economic growth on the continent, according to the recent International Energy Outlook 2018 (IEO2018) by the US Energy Information Administration (EIA). The Outlook has focused on how different macroeconomic conditions and growth patterns might affect international energy markets in three key regions of the world: China, India, and Africa.

‘The work presented in IEO2018 is an important step to better understanding the effects of different patterns of economic growth on China, India, and Africa, as well as improving EIA’s international modelling capabilities,’ said EIA Administrator Linda Capuano.

The Outlook said that the inevitable increased economic growth on the continent would lead to an expansion of the manufacturing sector and an increase in industrial energy use ‘because of possible regional competitive advantages.’

The EIA’s projection is for Africa’s energy consumption per capita to be about 30 per cent higher by 2040. ‘Africa, with its wealth of natural resources and fast-growing population, may have a significant impact on international energy markets over the next 25 years,’ the Outlook noted.

It added that there was the need to ‘further explore the relationship between projected changes in GDP and the response of energy consumption, particularly in the industrial end-use sector.’

The Outlook continued: ‘Africa has a wealth of natural resources and a younger and faster-growing population than many other parts of the world – and potential for rapid economic growth. This case also leads to an expansion of the African manufacturing sector and an increase in industrial energy use.

‘The growing gap in GDP per capita between Africa and other regions highlights the potential for faster African economic growth. Further infrastructure development, particularly transportation network development and electrification, could alter this projection,’ the Outlook added.

But despite the positive forecast, the EIA noted that Africa’s energy consumption per capita lagged behind other regions. ‘In 2015, Africa’s manufacturing sector was relatively small, and its services sector was relatively large, which contributed to Africa’s comparatively low energy use,’ the Outlook said.

According to the World Bank the electrification rate in Africa was 42 per cent in 2016, a situation compounded by bankrupt power utilities failing to provide efficient and regular electricity supply.

‘Only one out of every three Africans has access to electricity,’ it said in its report: ‘Making Power Affordable for Africa. Power shortages are widespread, not least because utilities are cash strapped and have allowed their assets to fall into disrepair.’

The World Bank added that only power companies in Seychelles and Uganda, out of 39 surveyed in Africa, were in a position to make enough money to cover operating costs and capital expenditures that were needed for maintenance and expansion of the grid.

‘In only 19 countries did the cash collected by utilities cover operational costs; just four of these countries were also covering half or more of capital costs, based on new replacement values of current assets.

‘Such large funding gaps prevent power sectors from delivering reliable electricity to existing customers, let alone expand supply to new consumers at an optimal pace,’ the World Bank noted.

An energy expert in London explained: ‘Although African governments want to provide cheap electricity for citizens, these countries do not have the capacity to produce enough power to meet rising demands.

‘They are still stuck with costly processes such as renewable energy when these countries can still use their fossil fuels reserves such as coal to improve power supply.’

The fossil fuels debate has been heightened since President Donald Trump came to power last year, when he called on the multilateral development banks to fund efficient and clean coal production in developing countries to help turn around their economic fortunes.

Speaking recently on the need for more use of fossils fuels, US Energy Secretary Rick Perry said: ‘You’re basically going to tell those people [in the developing world] you’re going to live in poverty, you’re going to die early and your kids aren’t going to be educated because you decided you’re going to pick and choose which fuel they’re going to use.’

Climate change activists see President Trump’s position on fossil fuels use as an ideological reversal of President Barack Obama’s opposition to the use of such natural resources, including coal.

The Trump administration is banking on improved technology that is making coal production less damaging to the environment.  ‘The technology is there for us to use coal that’s in abundant supply in this country and around the world,’ said US Energy Secretary Perry.

Countries such as South Africa and Kenya are showing great interest in clean coal technology to meet rising electricity demands

The EIA Outlook noted: ‘Africa’s population growth rate is higher than its energy consumption growth rate, underscoring the difficulties the continent will have in meeting its energy needs.’

The London energy expert noted: ‘It is clear that African countries with huge coal reserves will have to use this fossil fuel to provide power for a growing population. Given that the US is spearheading the use of clean coal technology, I don’t see why African countries can’t make use of this to move forward.’

US Energy Secretary Perry who is overseeing America’s drive towards clean coal production said: ‘…the highly efficient low emission technology that’s coming out of the coal industry… [is giving] the citizens of the world opportunities and options that nobody thought possible.’

 

 

 

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