South Africa: AEW 2022 Offers Insight Towards Reforming African Power Generation Monopolies

The first day of African Energy Week (AEW) 2022, held in Cape Town on 18 October, featured a panel discussion during which participants discussed the reformation of Africa’s power generation monopolies, presenting an in-depth look at the liberalization of energy markets and a transition towards a more competitive industry.

Moderated by Hendrik Malan, President of research and consulting firm, Frost & Sullivan Africa, the panel featured the participation of Alhassane Diallo, Counselor in Charge of Hydrocarbons, Ministry of Energy, Hydropower and Hydrocarbons, Guinea-Conakry; Nosizwe Nokwe-Macamo, Board Member, African Energy Chamber (AEC); Jonathan First, Managing Director, Delphos and H.E. Dr. Eng. Sultan Wali, State Minister of Energy & Water, Ethiopia.

“We are exploring reforms within the energy sector on the African continent,” said Hendrik Malan, President of Frost & Sullivan, adding, “The quality of policy is generally a big issue in Africa and is quite important because of the role of the private sector. Are we making progress towards closing the energy poverty gap and what reforms have there been to support our constructive move to close this supply gap?

The panelists explored and examined a suite of recent power sector reforms in Africa while addressing the effectiveness of these reforms and how governance and performance in the power sector could herald a new era for the energy landscape on the continent. The speakers touched on topics such as independent regulation, commercialization, decentralizing utilities, and introducing private sector participation and competition.

“Countries on the African continent are moving towards what kinds of reforms can be put in place, with the most important reform that we’ve noticed being the regulatory reform,” stated Nosizwe Nokwe-Macamo, Board Member for the AEC, adding, “The reason is because the regulatory reform assists in attracting capital investment. We are finding that countries, such as Nigeria, Kenya, and Uganda, have started moving towards, and looking at how to implement, regulatory reforms.”

In an effort to increase the role the private sector can play in meeting energy demand and achieving open access to energy through regional integration and power trading, it was noted that competitive and bilateral power trading could serve to improve reliability, reduce redundancy, and bring reliable and sustainable energy to millions of Africans, thereby alleviating energy poverty.

“We have to realize that a solution to the provision of energy has to rely more and more on the private sector. The regulatory reform in South Africa around power generation is an important one as companies will need to provide power to their businesses and if utility companies fail to do so then companies will have to pick up for them,” stated Jonathan First, Managing Director for market advisory company Delphos.

With the world of energy changing constantly and rapidly, accelerated innovations in power technologies, services and markets have resulted in upending relatively stable market prices and shares. With the rising abundance of digitalization, information and communication technologies, and as renewable and distributed energy and storage resources become more competitive, Africa will need to remain on the forefront of technical innovations as the world shifts towards a global energy transition.

“Solar and wind is everywhere, everybody has access to solar and wind. We are blessed as a continent. We don’t pay for it. It’s free and it doesn’t need transmission,” added First, adding, “To me, the solution to energy security is through renewable energy on a transitory basis.”

Despite the continent’s enormous renewable energy potential, over 600 million people on the continent lack access to reliable and affordable energy. By improving energy infrastructure, implementing reforms, transforming utility companies, and increasing the funding pool for new projects, Africa has continued to strive towards energy independence, particularly by targeting the renewable energy market.

“Africa has a huge amount of untapped renewable resources; however, our power generation capacity is still below 5,000 MW,” stated H.E. Dr. Eng. Sultan Wali, State Minister of Energy & Water for Ethiopia, noting that “More than 50% of Ethiopians are living without access to electricity, and more than 90% are dependent on biomass. Therefore, some of the main priority areas are to ensure access to universal access to electricity.”