Merowe Multi- Purpose Hydro Project in north Sudan

There is a direct link between economic growth and electricity supply, economists often say. In Africa, where only two in every 10 households are connected to electricity, the problem of power shortage is an historical reality.

A recent World Bank bulletin on energy reported the power sector on the continent is underdeveloped in generation, access and attendant installations. The result is a stunted GDP growth and low attraction for investors.

In an analysis in February, energy specialists at global investment consulting firm McKinsey & Company projected Sub-Saharan Africa will consume about 1,600 terawatt hours of electricity by 2040. This is four times the consumption in 2010, raising the current per-capita consumption by more than six-fold.

Their assessment was based on factors such as the projected five-fold rise in GDP, population doubling, rise in access levels as well as increased rural-to-urban transformation. 

Connected grids

It is not that Africa is resource-poor. In Sub-Saharan Africa alone, Kenya and Ethiopia could produce 80 percent of the 15 gigawatt hours of geothermal power the region has.

According to a UN paper on energy, there is a new potential for 400 gigawatt hours of gas-generated electricity (Mozambique, Nigeria and Tanzania may produce 60 percent of this), about 350 gigawatt hours of hydropower (the Democratic Republic of the Congo may produce 50 percent), about 300 gigawatt hours of coal-generated electricity (Botswana, Mozambique and South Africa represent 95 percent of this) and 109 gigawatt hours of wind capacity.

What is Africa doing about it?

In March, African government officials and energy experts meeting in Nairobi came up with an ambitious idea: to have countries connect their power grids by 2020.

According to Mosad Elmissiry, head of energy programs at the African Union's economic development project New Partnership for Africa's Development (NEPAD), four regional power corridors will be building blocks of the pan-African grid.

The Sustainable Energy for All Initiative in Africa, also known as SE4ALL, is a global initiative of UN Secretar General Ban Ki-moon aimed at ensuring universal access to modern energy sources such as electricity, doubling the rate of energy efficiency and increasing the amount of renewable energy for all worldwide.

SE4ALL's ambition is similar to that of the NEPAD program for developing physical structures that could integrate a continent whose trade with itself is just 13 percent. 

Ambitious plan

It is an ambitious vision that the NEPAD says could succeed from 2020. To start with, the four power grids - North-South, West, Central and North - will be linked. This means that by 2020, South Africa-Egypt, Kenya, Tanzania, Ethiopia, South Africa and Zimbabwe, Egypt and Sudan, and other countries could be connected to pools of electricity produced by different countries in the region.

If the plan goes through, economists say the continent's current electricity production of 120,000 MW hours could well be utilized.

"It will help to connect regions that have abundant energy sources relative to their demand, to places that have relatively high demand but scarce energy sources," Amar Breckenridge, an analyst at Frontier Economics, told ChinAfrica.

But still, it will not be enough. In Sub-Sahara, only Cameroon, Cote d'Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa have more than 50 percent of their population accessing electricity.

In the rest of the countries, the average is just 20 percent, according to the World Bank. In Africa, only South Africa and Egypt have power consumption over the average of 150 KW hours per capita.

It means Sub-Saharan Africa is the world's worst region in electricity access. With just 13 percent of the world's population, the region accounts for 48 percent of the population without access to electricity in the world.

That makes integrating power grids the most appropriate solution.

"Power grid connections can be economically viable in Africa if structured appropriately," said Zemedeneh Negatu, managing partner and head of transaction advisory services at Ernst & Young in Ethiopia.

Negatu gives the example of the Grand Ethiopian Renaissance Dam (GERD) being built on the Nile. Estimated to cost $5 billion, the GERD could be the largest hydropower project in Africa with a capacity of 6,000 MW. This power could be shared across the region.

"Because Ethiopia can produce the power in such large volume at much cheaper cost and more efficiently than other projects, customers across the region can purchase it at a relatively lower rate per KW hour than if each country were to build small costly power plants of their own," Negatu told ChinAfrica. 

Range of benefits

Energy experts say regional integration, power pools and promotion of renewable energy could be effective ways of surmounting the power challenge. The World Bank says integration alone could save Africa more than $40 billion in capital spent on installations, which could in turn save the consumers $10 billion per year by 2040. More grid connections could lower the cost of producing electricity by about $6 per unit by 2040.

There could be other benefits. While integration helps lower the cost of electricity, some experts see grid connections as a railroad on which African countries can further their trade and in turn avoid conflicts.

"The vast untapped [hydropower] potential [of the Nile] presents an opportunity for trade and sustainable development in the region, and can promote regional cooperation among the riparian states," John Nyaoro, Executive Director of the Nile Basin Initiative, a partnership among the Nile riparian states to develop the river in cooperation, told ChinAfrica.

Yet there is a catch. All economists and experts spoken to warned that such an ambitious project is costly and would depend on how countries harness power. For starters, a World Bank estimate says it could cost the region about $490 billion to generate power and another $345 billion to distribute it. 

Challenges ahead

Negatu pointed out that such projects would also require political goodwill, improved business environment and trans-boundary power trading laws in the associated countries. The cost to consumers is another big factor to consider.

"The connections are viable but will obviously be expensive, given the terrain and current levels of electricity production and consumption. But they will be a major game changer in Africa's economic leap forward," said Cliff Otega, Managing Director and head of energy and natural resources at Standard and Mutual, a consultancy in Kenya.

However, "long-distance power lines linking existing grids will not do much to reduce the big gap between Africa's energy-haves and have-nots," added Lori Pottinger, Communications Director at International Rivers, an NGO that advocates alternative sources of renewable energy to protect river systems.

"This is because most of the people live far from existing grids and cannot afford the rates that the national grids are charging. Solving this problem will take increased development of localized mini-grids powered by small-scale solar or mini-hydro plants," she observed.  

(Reporting from Kenya)