Thomas Edison, after inventing the incandescent light bulb, said that electricity would become so cheap that only the rich would burn candles. He was right too, but only for some. More than 125 years after Edison made that prediction, many nations are struggling to see in the dark.
It is well documented that sub-Saharan Africa has a poor electricity infrastructure. Despite several billions of dollars in aid packages and for all the faintly ludicrous attempts of musicians to ‘make poverty history’ via the odd pop concert or two, the situation is actually getting far worse.
By some estimates, as many as 25 of the 44 sub-Saharan nations are facing crippling electricity shortages, practically a pandemic. Rolling blackouts, aka load shedding, an intentionally engineered electrical power outage caused by insufficient available resources to meet prevailing demand for electricity, are widespread. Electricity theft is rife in poorly managed grids.
In Nigeria, a government report said in April that just 19 of its 79 power plants were operational, that daily electricity output had fallen 60 per cent from its peak, with blackouts costing the country an estimated $1 billion a year. In Uganda, once a major electricity exporter, the capital Kampala is sometimes blacked out for 24 hours a day. Zambians have to suffer daily rationing; resource-rich Ghana’s on-going power shortage is hampering economic growth. The World Bank estimates that the lack of reliable power is hampering the region’s development to the tune of two per cent off the annual growth rates of the worst hit.
But the problem is by no means confined to Africa. Bangladesh is facing a severe power crisis due to a deficit of 1500-2200 MW. India is expecting a power shortage this month of around 35 per cent of demand, whereas load-shedding in the Uttar Pradesh, Kerala and Bihar provinces are often exceeding twelve-hours a day. Pakistan and Sri Lanka are no exception; power demand there has recently surpassed available supply.
Turkey fears regular blackouts in some of its major areas. Syria has had a summer of power failures and shortages, with blackouts in Damascus lasting five hours. Egypt has withdrawn large subsidies on electric supply, raising prices by 60 percent, a move that could trigger a serious power crisis. In Europe, Hungary also had a shortfall in June of 600 MW. Greece, Albania, Romania, Bulgaria all struggle to keep the lights on and even in the UK, Scotland was on the brink of a major crisis after an accident at a major power plant left supplies to the national grid at precariously low levels.
Of course, the primary reason for the lack of power is a myopic lack of infrastructure investment at a time when several of these affected nations have enjoyed a sustained period of economic growth. None more so than South Africa, which is now paying the price for not looking beyond its nose. The state power company Eskom, the world’s fourth largest power utility, was advised in a 1998 report that it would run short of electricity in 2007. Plans to privatize Eskom delayed investment in the grid and when this plan also stalled, South Africa found itself in a mess that may take several years to get out of.
Jacob Maroga, CEO of Eskom, said that a combination of poor planning, demand growth and a failing policy to bring in independent power producers has left reserve margins at just eight per cent, barely half the international norm of 15 per cent. Maroga predicts that Eskom will reach this only by 2013, when new baseload power stations come on stream. Until then, load shedding will continue, which is bad news not only for South Africans, but also its neighbours, several of which have depended on the country in times of need.
But it is not all doom and gloom, dozens of nations trying to build their way out the crisis. Zambia, which has not built a power plant for some 15 years, plans $1.2 billion in new capacity, financed mainly by China and India. South Africa is spending $20 billion. Uganda has given the green light for a 250 MW hydropower project on the Nile just below the Bujagali Falls. AES Corporation of the USA and South Africa’s Madhvani International are spending $800 million on the dam, the biggest-ever foreign investment in east Africa. Similar dams are planned for the Niger and the Volta.
Also planned is what could become the mother of all hydropower projects – Grand Inga on the river Congo, which sends 42.5 million litres of water pouring into the Atlantic every second – a flow second only to the Amazon. Current plans see Grand Inga generating 39 000 MW – more than twice the projected capacity of the Three Gorges Dam in China and enough to satisfy the energy needs of the entire African continent. This giant run-of-river project would come attached with a giant price tag – estimates range anywhere from $40 billion to $80 billion, plus at least another $10 billion to connect Inga to a continent-wide electricity grid for the main population centres.
However, the cost of taking power from Grand Inga to distant markets could far exceed the cost of generation once capital investment, operation and maintenance and normal line losses of 15 to 20 per cent are factored in according to one estimate. Critics say that the huge amounts of money required for the project would be better spent with smaller scale, localized energy projects that would target meeting the needs of Africa’s poor majority.
But where will the money come from? One proposal is that for every unit of African origin carbon consumed by the developed world, a predetermined amount of green credits or carbon credits would be yielded. The partners could then either supply parts, components, or systems directly, an equivalent amount of investment capital, or lend credits to finance the distribution of renewable energy services, knowledge or equipment.
International relief targeted at poverty reduction could also be redirected towards subsidizing renewable energy projects. Because of the integral role that electrification plays in supporting economic and social development – IT and the Internet, radio, television – funding of rural electrification can be seen as core method for addressing poverty. What is clear is that these countries need power for economic growth and that economic growth needs power. The opportunities are obvious, and it will interesting to see which power companies profit most from these needs.