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Africa's energy consumption growing fastest in world

Africa's energy demands are skyrocketing, but with 64 recent major discoveries of fuel deposits, it is in a good position to meet its needs.

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A British firm announced this month that it will build the world's fourth-largest solar power plant in western Ghana, a 155-megawatt project that will be operational by 2015 and increase the country's electricity supplies by 6 percent.

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The continent’s largest wind farm is being built in northern Kenya. South Africa already draws 5 percent of its power from nuclear plants, and research continues into a small-scale reactor that analysts argue could be the most innovative way to power off-grid corners of the continent.

Too little, too slow

But wind and solar do not provide reliable supplies, and hydroelectric schemes are at the mercy of the changing climate.

Alternative energies with greater efficiencies are also beset by a lack of trained staff and can take up to 20 years to bring regular power to national grids, according to the World Energy Council.

“Renewables will not happen immediately,” said Tony Surridge of South Africa’s National Energy Development Institute.

“From a realistic viewpoint, fossil fuels are highly concentrated and so it will be decades before there is a direct confrontation between renewables and fossil fuels. Developing countries have to make trade-offs, especially considering the need to double the output of electricity over the next 20 years.”

Challenges remain, not least a lack of coordinated structures in regional regulations governing the energy industry, and the need to attract significant international investments into markets until recently seen as high risk.

“It is not wrong to hope that in the future, these new natural resources will bring a true benefit to ordinary citizens,” says Subiro Mwapinga, an oil and gas industry expert based in Dar es Salaam, Tanzania. “But the fact remains that there are great problems with the transparency of contracts being issued, and a deep misunderstanding among the ordinary population of what the gas we have found means to them.

“These are things that will take a long time to overcome. We will not be Qatar or Dubai overnight.”

Corruption obstacles

Implicit in Mr. Mwapinga’s analysis is a recognition that Africa’s energy sector has been notorious for corruption. 

A recent study estimated that Nigeria had spent more than $40 billion reforming its electricity industry for less than 10 percent additional power supply. 

Angola has been praised for constructing roads, ports, universities, and hospitals with the windfall from its oil supplies, but global governance watchdogs claim as much as $32 billion went missing from its export receipts between 2007 and 2010.

However, international analysis suggests that the tide is turning against entrenched corruption, and investors should not be deterred.

“While the risk rankings overall in Africa are quite high, for many countries the ‘risk trend’ is improving,” says Elias Pungong, oil and gas sector lead analyst for Ernst & Young in Johannesburg. “Most importantly though, the opportunities for Africa in this sector are enormous, and the challenges and risks can be addressed and mitigated.”

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