African countries will require an average of $40bn power grid investments annually for about five years to deliver stable electricity to citizens on the continent, Kola Adesina, Group Managing Director, Sahara Power Group, has said.
Delivering a keynote address on “The Future of Power in Africa” over the weekend at the Lagos Business School Energy Club’s annual Africa Energy Conference, Adesina said projections indicate an increase in energy demand across Africa in the coming years.
The conference also featured a panel session of Tonna Ejiofor, Head, Debt Solutions, Investment Banking, FBNQuest; Folake Soetan, Chief Executive Officer of Ikeja Electric Plc; Johnbosco Uche, Energy Transition Business Opportunity Manager, Shell; Segun Adaju, CEO, Consistent Energy Limited; Kofo Olokun-Olawoyin, Chief Power Procurement and Regulatory Officer, Eko Electricity Distribution Company (EKEDC).
Adesina noted that in 2040, this demand could be around 30 percent higher than what was obtainable currently, adding that it was vital for all stakeholders to work towards shoring up the continent’s power grids through continuous investments.
“Massive investment in Africa’s grids is critical to improve system reliability, expand access and facilitate the integration of variable renewables,” he stated.
Adesina added, “Annual investment in electricity grids should more than triple in the 2026‐30 period, compared with 2016‐20, reaching $40bn per year on average. Distribution networks account for over two‐thirds of this total.”
He explained that the projected increase in energy and electricity demand makes access to electricity a quest that Africa must pursue relentlessly.
“In 2021, 43 percent of the population of Africa, around 600 million people, still lacked access to electricity, 590 million of them were in sub‐Saharan Africa,” he said.
According to Adesina, 90 million people, or six percent of the current total population would need to gain access each year on average from 2022 for every African to have access to electricity by 2030.
According to him, the electricity demand will be influenced by the growth of the population in Africa, the massive migration from rural areas to urban areas, and industrialization.
There are also industry projections that the use of drones and digitalization, including geographic information systems, outage management systems, and smart metering is expected to increase among African power players.
Speaking during the panel session, Folake Soetan, Chief Executive Officer of Ikeja said consumers are currently not billed for the true cost of generating and delivering power, which affects capital improvements to the distribution network.
According to her, tariffs should be reviewed periodically to ensure costs are reflective of current market conditions, and changes to tariffs should be announced regularly.
In her comments, Kofo Olokun-Olawoyin, Chief Power Procurement, and Regulatory Officer, Eko Electricity Distribution Company (EKEDC) stressed the importance of investing in the grid, to address infrastructural deficits in power generation, transmission, and distribution.
The speakers called for market reforms and outlined priority areas, tariff structure reform, and the use of concession agreements granting rights to private operators. Other plans include regulatory carve‐outs for private sector investment and ownership and the introduction of auctions and competitive tenders.
The President of the Energy Club, Temitope Osunrinde, thanked the speakers for their insightful and well-articulated perspectives, the conference sponsors – Sahara Group, Merit Abode Nigeria Limited, Elektron Energy – and the Lagos Business School.
“As Nigeria approaches another election, this theme and our discussions today are appropriate and well-timed to set the tone and provide policy recommendations to the incoming leadership.
We believe that these discussions and recommendations can help to address this intractable challenge that constitutes a major plank and inspirational focus of Africa’s present development strategy”.
The second Africa Energy Conference, hosted by the Energy Club of the Lagos Business School (LBS), discussed Finance & Disruptive Business Models for Energy, with an overview of current trends, business opportunities, and what is needed to accelerate energy access in Africa.
The Energy Club was envisioned to help LBS students find unique opportunities at the intersection of business and the energy industry, from conventional to alternative resources.
