Emelly Mutambatsere

Principal Economist

African Development Bank

South Africa

Outline of presentation

i. Background

ii. The study

iii. Africa’s wind energy potential

iv. Mapping market development

v. Explaining trends

vi. Policy implications

Background The problem Possible solutions

The problem

Africa’s energy problems are well

documented:

Low power generation capacity per capital

Low grid access rates

High systems operation costs

High but non-cost reflective tariffs

Unstable electricity systems; unreliable supply

High connection charges; connection delays

Possible solutions

Conventional fossil fuel based solutions

Cost effective

Several African countries are well endowed

Clean energy path

Africa’s reserves of renewable energy resources

are the highest in the world (WEC, 2010)

More than half of the top 30 countries by measure

of endowment in renewable energy resources

located in Africa (Buys et al 2007)

The study Why wind? Objectives Data and sources

Why wind?

Wind now the world’s fastest growing energy

source.

Installed capacity grew at ~30% pa between 1996 & 2008

Exponential growth in ongoing/planned projects in Africa

Wind technologies rapidly advancing.

On-shore wind now competitive on generation cost basis

But Africa’s potential largely underdeveloped. Accounted for below 1% of installed capacity in 2011

Objectives

Contribute to filling the knowledge gap on

development of wind energy markets in Africa

What is the potential?

How much of this has been developed?

How is the market evolving?

What explains this trend?

What direction should policy take?

Data and sources

Data sources:

International Energy Agency

Wind maps from various sources

MDB’s project databases

Bilateral donors’ project databases

Project finance databases

UNFCC

Analyzed non-parametrically for a continent-wide

mapping of the market.

Africa’s wind energy potential Africa’s wind speed map On-shore wind energy potential

Wind Speed Map

The best winds

observed in:

Cape Verde,

Mauritania, Morocco,

Tunisia, Algeria,

Egypt, Djibouti,

Eritrea, Somalia,

Seychelles, Lesotho,

South Africa,

Madagascar

On-shore potential

Buys et at (2007) measure ‘potential’ in tons of

oils equivalent

Important assumptions regarding wind speed,

location, technology efficiency, turbine density.

Most on-shore potential located in coastal areas

Large inland potential observed in Chad and

Kenya

On-shore potential (mtoe)

0

10

20

30

40

50

60S

om

alia

Sud

an

Lib

ya

Mau

rita

nia

Egyp

t

Ma

dag

ascar

Ken

ya

Chad

Eth

iopia

Ca

pe

Ve

rde

Tunis

ia

Moro

cco

Sou

th A

fric

a

Moza

mb

ique

Ta

nza

nia

Ang

ola

Na

mib

ia

Seych

elle

s

Cong

o

Co

ng

o, D

em

…

Mauritiu

s

Com

oro

s

High Low

Mapping market development (Major trends)

1. Installed capacity

0

200

400

600

800

1000

12001

98

8

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

Cap

acit

y (M

W)

Annual capacity Cumulative capacity

2. Coverage

0

500

1000

1500

2000

2500

3000

3500

4000Eg

ypt

Mo

rocc

o*

Sou

th A

fric

a

Ken

ya

Nam

ibia

Eth

iop

ia

Djib

ou

ti

Gh

ana

Mau

riti

us

Nig

eria

Tun

isia

Tan

zan

ia

Mo

zam

biq

ue

Alg

eria

Mau

rita

nia

Cap

e V

erd

e

Erit

rea

Cap

acit

y (M

W)

PlannedOngoingCompleted

3. Geographic location

4. Project size/capacity

Installed

Capacity (MW) Completed Ongoing Planned

Total 1,104 1,731 10,907

Range 0.2 – 140 5 – 300 10 – 5,000

Mean 37 108 227 (126)

Median 25 95 110

Standard

Deviation 40 86 701

5. Project size/cost

0

200

400

600

800

1000

1985 1990 1995 2000 2005 2010 2015 2020

Pro

ject

Co

st, U

SD m

illio

n

Project completion year (actual or expected)

…reflecting a phased approach to sector

development

Pilot

Small, lack of familiarity

with technology, insufficient

geo-referenced

resources and data sets

Semi-commercial/

Demo

Further technology

testing, developing

public sector

capacity

Commercial

Sufficient

resources to

fund large

scale

operations

6. Cost per capacity unit

0

1

2

3

4

5

6

0 50 100 150 200 250 300 350

USD

mill

ion

per

MW

Installed Capacity per Project (MW)

…correlated to procurement method

0

1

2

3

4

5

6

0 1 2 3 4

Un

it c

ost

, USD

mill

ion

per

MW

1=Public; 2=PPP; 3=Private

Linear (1=Public; 2=PPP; 3=Private)

…and exhibiting market specific

trends

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1985 1990 1995 2000 2005 2010 2015 2020

Un

it c

ost

, USD

mill

ion

pe

r M

W

Project completion year (actual and expected)

Egypt

Morocco

South Africa

Expon. (Egypt)

Expon.(Morocco)

Expon. (SouthAfrica)

7. Project sponsors

Completed

Public sponsored - governments (78%)

PPP – 7%

Private sponsored - 14%

Pipeline – ongoing and planned

Public sponsored - governments (37%)

PPP – 11%

Private sponsored – (52%)

8. Lenders Financing for Completed Projects, % of

value DFIs, % of Non-Concessional Funding

in Completed Projects

9. CDM

¼ of the projects benefited

NPV of CO2 sales revenues estimated at

5%-20% of initial project cost

Anecdotal evidence points to positive effects

on commercial viability

But ¾ of projects still not applying or failing

to access CDM

Trends: a recap

Market dev. started slow with N. Africa dominating

SSA is quickly catching-up

Installed capacity expected to more than double after completion of ongoing projects.

A 5-fold increase expected if all planned projects are implemented.

Size of projects is increasing, private sponsorship is on the rise, and some countries are managing to leap-frog

All regions except C. Africa have completed/ongoing projects

DFIs the lead lenders; still very low commercial debt flowing into projects; grant financing is shrinking.

Outlook

Despite this progress, the share of wind in Africa’s generation mix is expected to remain low

2% total by 2030 (IEA)

Most progress is in MICs.

Lower progress in LICs – even those with the highest wind energy potential.

Explaining trends Technical, Economic, Climate change, Business environment.

Explaining trends

Technical considerations

Intermittent, non-storable resource

Economic considerations

Value for money affected by technical features of wind,

subsidies on fossil fuels

Climate change considerations

Not as high on the political agenda of low income countries

as access

Business environment considerations

Still inadequate in low income countries; evolving in MICs

Policy implications

Political commitment is a prerequisite to market

development

Establish champions

Provide clear legislation

Correct market distortions

Fund feasibility studies, develop geo-referenced

databases

Invest in regionally integrated power systems

Thank you.