If you take a solar map and a wind map and compare the African continent to other continents, you’ll see we have some of the best resources in the world. The solar resource in the Northern Cape of South Africa is 25 percent higher than that of Spain, and Spain is considered to be a world class site.
Renewable energy can bring enormous socio-economic benefits and be a ticket out of poverty for many Africans. As much as one needs roads, one needs power. And to get it from a renewable energy source means you are creating a sustainable electrical solution that will also power jobs.
Future jobs will not just come from servicing the renewable energy industry or constructing the assets, but also by creating a catalyst for other economic development. Access to energy will lead to new towns, increased migration, new businesses and economic growth.
A Different Model
Biotherm Energy is an Africa-focused renewable energy power company. We build out wind and solar projects in Sub Saharan Africa, and currently have three under construction. An average home uses a one kilowatt a day, so the 47 megawatts that we are producing can power 47,000 homes.
Biotherm Energy is committed to the uplift and development of the local communities in which we operate. Our projects are based in rural parts of country, and we not only produce power that we sell to utility, but also make sure local communities engage in and can benefit from our projects.
Ours is a different business model; not what you’d typically see from corporates. A local community trust owns 5% of the project, so the local community can benefit from future dividends. We also work with communities to create socio-economic development projects, around issues such as women’s empowerment, rural development and education.
One of the main challenges we’ve encountered is a lack of local skill set, and that’s why we’re developing skills transfer and development programs between international partners and local suppliers. We engage with local training schools to make sure people are trained over two or three years, and also send people to international construction companies to help them develop new skills.
However we are operating in a difficult environment. Economic constraints have resulted in a change in policy around renewable energy. The renewable energy industry was catalyzed by a tariff system that was put in place to help build and deploy projects, but the cost to government was high. Now the building cost has come down, and so many countries – like Spain – have stopped their tariff regime.
Governments may ask: why do we need to subsidize this industry? But we say the truth is governments have been subsidizing the hydrocarbon industry for last twenty to thirty years. Renewables are new and every new technology needs subsidizing, but governments are pulling those subsidies sooner than later.
Policy uncertainty is now a global issue, and we need governments to guarantee that a program will stay in place even if the government changes, and this demands cross party agreement.
The industry still suffers from a lack of competitive financing. The perceived risk of renewables is higher than the actual risk. We need to look at different financing solutions, and private-sector to private-sector engagement will be key. The private sector will also need to develop innovative technologies that can continue to drive down the cost of production.
Every country needs to adapt to renewable energy. There is a perception that renewables are difficult and expensive to deploy. In order to get rid of the noise in the system, we need the commitment of finance and energy ministers and their departments to meet and learn the lessons of other countries like Spain, Italy and the UK.
Renewables are the way forward for Africa, and have the potential to power the whole of the continent. But policy certainty and regulation will be crucial for the industry to attract investment and grow.
Jasandra Nyker is CEO of BioTherm Energy, a renewable energy investment and independent project development platform focused on sub-Saharan Africa. This piece first appeared on the WEForum blog.