Analysis and Challenges of the African
Energy Sector and Potential for
Sustainable Bio-Energy Options
by
Stephen Karekezi, Waeni Kithyoma & Ken Muzee
AFREPREN/FWD, Nairobi ,Kenya
www.afrepren.org
Outline
• Key messages
• Brief overview of African Energy sector
• Key challenges facing the energy sector in Africa
• Biofuels – key drivers & benefits
• Brief discussion of key problems/trade-offs
• Brief review of key biofuel options
–
–
–
–
–
Biogas
Bio-ethanol
Biodiesel
Biomass gasification
Biomass cogeneration
• Selected case example
– Biomass cogeneration – Mauritius
Key Messages
•
For Africa, especially sub-Saharan Africa: Special challenge of addressing trade-offs in
•
For Africa, especially sub-Saharan Africa: GHG mitigation a lower level concern with
•
Food security – switching of land from food production to energy crops: Fewer problems
•
Environmental risks – water use, mono-crops thus reducing bio-diversity, displacing subsistence
agriculture into marginal and forest lands: Continues to be a problem particularly water
context of high poverty levels and inadequate food supply and limited access to
modern energy services as well as large number of land-locked oil-importers.
greater interest in adaptation capacity.
with existing plantations (e.g. sugar cane) that use agro-waste or by-products.
Bigger problem is reliance of Africa on food imports.
but greater difficulties with respect to green-field new investments.
•
Benefit sharing – who benefits? Agro-industries, farmers: Large and small scale), oil industry
which is increasingly interested in biofuels? Revenue sharing combined with an open
political system and sound government institutions has allowed benefits to be
widely shared. These pre-requisites are not found in many sub-Saharan African
countries
•
Technological development – can local industry develop autonomous and independent biofuels
know-how or would it simply entrench existing unequal relationships in technology know-how
and access? Technological transfer and development appears to have taken place,
important for strengthening capacity to adapt to climate change
Energy Consumption in Africa
* Biomass refers to combustible renewables (mainly fuelwood, charcoal and agro-residues) and waste
Source: IEA, 2008
Sub-regional Energy Consumption
Africa Best Understood As Three Regions
– North Africa (heavily reliant on oil and gas)
– South Africa (heavily reliant on coal, oil and gas)
– Sub-Saharan Africa (largely reliant on traditional biomass)
Key Energy Challenges Facing Africa
• Although very low, modern energy consumption on a
per capita basis is declining
• Electricity supplies failing to keep pace with growth in
demand
• Low electrification level & very slow increase in number
of connections – lower than population growth in most
sub-Saharan African countries
• Oil prices doubled in 1 year increasing transport cost.
High & volatile oil prices = balance of payments
problems for oil importing African countries.
•
High oil prices combined with decreasing share of hydro in
power supply of sub-Saharan Africa (partly a result of
privatization) has spread oil crises to power sector.
•
In 2007 alone, energy crisis in 2/3rd of Africa - frequent
and extended electricity outages partly due to drought &
inadequate power generation (power available 2-3 days a
week)
$
Modern Energy Consumption Per Capita
Declining in most of Africa
A few successes
Botswana, Senegal, Kenya, Ghana, Mauritius, Ghana,
Seychelles, Namibia, Tunisia, Morocco, Egypt & S. Africa
Generation Capacity Shortfall
Reported Power Crises in Africa
• Ongoing: Uganda,
Tanzania, Rwanda, Ethiopia,
Ghana, Zimbabwe, Sierra
Leone, Nigeria, Liberia,
Burundi, South Africa
• Close to 30 countries facing
major power problems
• Some countries' power
sector in relative good
shape: Mauritius, Kenya,
Tunisia, Egypt, Algeria, Libya
& Morocco
Most African Countries Import Oil
• In 2005, there were 39 net
oil importers and 10 net oilexporters
• Growing share of exports
used to import oil
• Significant oil exporters rely
on imported refined oil
products
• Shrinking oil reserves in oil
exporting countries
Biofuels – Key Drivers
Oil Imports as a Percentage of Total Imports
Number of African oil
Category (in
%)
importing countries
Oil Imports as a Percentage of Total Imports
Less than 5
5
5 – 10
14
10 – 15
16
15 – 20
10
20 – 25
1
More than 25%
1
Source: AfDB,2006 - Computed using IEA data
Biofuels – Key Drivers
Remaining Years of Oil Extraction
80
2004 oil extraction rate
70
Number of years
60
50
40
30
20
10
Source: AfDB,2006 - Computed using African Development Bank data
Sudan
Ghana
Côte d'Ivoire
Eq. Guinea
Sao Tomé
Tunisia
Egypt
Angola
Cameroon
Congo
DRC
Chad
Algeria
Gabon
Mauritania
Nigeria
Libya
0
Biofuels – Key Drivers/Benefits
• Rising oil costs (recently peaked to above
$140/barrel – talk of $200 to $300/barrel).
• Even if high prices are transitory, impact
on weak & vulnerable sub-Saharan African
countries is huge
• Declining biofuels production costs –
ethanol
• Export potential of biofuels (although
increasingly questioned, European
Commission biofuels targets appear to
present lucrative export market but could
entrench external export dependency
which has contributed to food supply
vulnerability)
Biofuels- Key Drivers & Benefits
• Can be reliable, local and
sustainable source of
energy, important for
continent with young
and growing population
• Can reduce greenhouse
gas emissions
• Can be an important
source of jobs
• Existing agro/forestry
industries have skills and
capital to produce
biofuels at competitive
costs
Job creation potential
of biofuels
Fuel
Biodiesel
Jobs per
TWh
16,318
Bioethanol
3,770
Gas
130
Nuclear
80
Coal
700
Biogas
1,341
Source: Earthlife Africa/SECCP report 2003
Key Problems/Trade-Offs
• Food security – switching of land from food production to
energy crops
• Environmental risks – water use, mono-crops thus reducing
bio-diversity, displacing subsistence agriculture into marginal
and forest lands
• Benefit sharing – who benefits? Agro-industries, farmers
(large and small scale), oil industry which is increasingly
interested in biofuels?
• Technological development – can local industry develop
autonomous and independent biofuels know-how or would it
simply entrench existing unequal relationships in technology
know-how and access?
Biogas – Status and Trends
• Some experience in the region with
mixed results
• Institutional digesters more successful
than domestic units
• Tanzania has registered good progress more than 4,000 domestic-size biogas
plants have been in Tanzania during the
past 20 years
• Pilot biogas projects implemented in
Kenya, Uganda, Ethiopia and Sudan
• Biogas in prisons initiative in Rwanda
awarded Ashden Award in 2005
Bioethanol – Status and Trends
• Widely developed in the region
• Linked mainly to sugar industry and
cogeneration
• Ethanol produced in Kenya, Uganda
and Ethiopia
• Plans to produce ethanol in Sudan.
Kenana has target of 70 million litres
by 2014
• Finchaa in Ethiopia produces 8
million litres annually
• Ethanol blending practiced in Kenya
in the past
• Ethiopian government signed
agreement with petroleum importers
for minimum blending target of 5%
Biodiesel – Status and Trends
• Significant interest in biodiesel
• Lots of pilot schemes with
land allocation to interested
investors accelerating
• Technology still to be proven
on a wide scale
• A number of crops already
grown in the region suited for
biodiesel production i.e. palm
oil, sunflower, soyabean,
maize and Jatropha
• Pilot biodiesel projects in
numerous African countries
Biomass Gasification
Status and Trends
• Largely embryonic- no large-scale biogasification projects running in the region
• A few donor funded demonstration
projects implemented
• Demonstration projects implemented in
Tanzania (Tanzania Wood Industry
Corporation)
• Biomass gasifiers implemented in Ethiopia,
Sudan – faced operational challenges
• Muzizi tea estate in Uganda has had some
success. Replaced fossil fuel generator
with gasifier generating 200kW. First
application of more than 10kW in East
Africa
Biomass Cogeneration
Status and Trends
• Widely developed in the region Most sugar industries in eastern
Africa currently practicing cogeneration for own use
• Important option as agriculture and
agro-industries account for close to
50% of sub-Saharan Africa’s GDP
and over 70% of employment
• Sugar industry directly or indirectly
impact on 4-7 million people in
Western parts of Kenya
• Could be replicated across all agroindustries
– Wood/timber, pulp and paper
– Coffee, sisal, palm oil, tea, cocoa,
tobacco, etc
Key Problems/Trade-Offs
•
Food security – switching of land from food production to energy crops: Bio-
•
Environmental risks – water use, mono-crops thus reducing bio-diversity, displacing
subsistence agriculture into marginal and forest lands: Continues to be a problem
ethanol & co-generation using by-products but switching of land affecting
food production appears to have occurred in many sugar growing areas
but mitigated by increased revenues from sugar cane sales and
employment in sugar industry.
for most agro-industrial crops such as sugar cane.
•
Benefit sharing – who benefits? Agro-industries, farmers (large and small scale), oil
industry which is increasingly interested in biofuels? Primarily agro-industries
and to some extent farmers particularly in countries that practise outgrowers schemes with sound revenue sharing schemes.
•
Technological development – can local industry develop autonomous and
independent biofuels know-how or would it simply entrench existing unequal
relationships in technology know-how and access? Agro-industries have
developed substantial indigenous know-how but still very dependent on
external technology suppliers. Relatively better placed to deal with climate
adaptation needs.
Case Study 1: Cogeneration in Mauritius
• Successful in sale of power to
grid
• Accounts for close to 40% of
national generation capacity
(of which 25% bagasse)
• Began with smaller installations
(1.5MW - 5MW, now installing
82MW plants)
• Grid connected cogeneration
operational in Uganda, Kenya,
Tanzania, Zimbabwe, and plans
underway in Malawi, Ethiopia,
Swaziland and South Africa
Cogeneration in Mauritius
Energy Pricing
Based on informal consultation
Power mode
Power
Plant
Price – Rs (us
¢)/kWh
Year
Characteristics
Intermittent
-
0.16 (0.6)
1982
Price frozen since 1982
Continuous
Medine
0.55 (1.9)
1982
No change in price since 1982 –no changes
brought to the plant
Continuous
6 PPs
1.05 (3.7)
1997
44% of kWh price indexed to changes in oil
price and the other 56% is fixed
1.40 (4.9)
2000
Firm
FUEL
coal - 1.63 (5.7)
bag. - 1.56 (5.5)
1985
Invested in new equipment
Indexed to coal price
Firm
DRBC
coal - 1.53 (5.4)
bag. - 1.46 (5.1)
1998
Invested in second hand equipment
Indexed to coal price
Firm
CTBV
both - 1.72 (6.0)
2000
Indexed to coal price, cost of living in Mauritius,
foreign exchange rate fluctuations
Cogeneration in Mauritius
Sugar Sector Reform initiatives & Bagasse
Energy
Year
1985
1988
1991
Policy initiatives Emphasis on
Sugar Sector Action
Plan
Bagasse energy policy evoked
Sugar Industry
Efficiency Act
-Tax free revenue from sales of bagasse and
electricity
-Export duty rebate on bagasse savings for
firm power production
-Capital allowance on investment in bagasse
energy
Bagasse Energy
Development
Programme
-Diversify energy base
-Reduce reliance on imported fuel
-Modernise sugar factories
-Enhanced environmental benefits
Cogeneration in Mauritius
Sugar Sector Reform initiatives & Bagasse
Energy
Year
1997
Policy initiatives
Emphasis on
Blue Print on the
Centralisation of Cane Facilitate closure of small mills with concurrent
increase in capacities and investment in
Milling
bagasse energy
Activities
2001
Sugar Sector Strategic
Plan
-Enhance energy efficiency in milling
-Decrease number and increase capacity of
mills
-Favour investment in cogeneration units
2005
Roadmap for the
Mauritius Sugarcane
Industry for the 21st
Century
-Reduction in the number of mills to 6 with a
cogeneration plant annexed to each plant
Land Area Under Cane in Mauritius vs.
Electricity Output from Sugar Industry
Source: MSIRI, 2006
Key Problems/Trade-Offs
Mauritius Case Example
•
Food security – switching of land from food production to energy crops: Increased incomes
•
Environmental risks – water use, mono-crops thus reducing bio-diversity, displacing subsistence
agriculture into marginal and forest lands: Continues to be a problem particularly water
from agriculture and bio-energy has allowed higher food imports resulting in higher
food security. Reduced land requirements arising from higher efficiency has opened
land for other food crops.
but higher incomes from agriculture and bio-energy has allowed Mauritius to invest
in conservation which in turn, promotes tourism and development of other
economic sectors such as textiles, IT and financial services.
•
Benefit sharing – who benefits? Agro-industries, farmers: Large and small scale), oil industry
which is increasingly interested in biofuels? Revenue sharing combined with an open
political system and sound government institutions has allowed benefits to be
widely shared. These pre-requisites are not found in many sub-Saharan African
countries.
•
Technological development – can local industry develop autonomous and independent biofuels
know-how or would it simply entrench existing unequal relationships in technology know-how
and access? Technological transfer and development appears to have taken place
with Mauritius selling its know-how to other African countries and investing in
agro-industry and bio-energy in mainland Africa. Substantial increase in its climate
adaptation capability.
Key Policy Recommendations
• Greenfield vs Existing Agro-Investments: Focus on
existing agro-industries, encouraging use of by-products &
waste products. Be more careful with greenfield new
investments.
• Existing crops vs new crops: Better to lean towards to
existing proven crops such as sugar cane and be more
careful with new crops such as Jathropha.
• Revenue sharing/land issue: Land ownership is key to
revenue sharing. In near term, best to lean towards
outgrowers scheme where land remains in hands of small
scale farmers.
Key Policy Recommendations
• Standard Power Purchase Agreements (PPAs):
contributed to success of bagasse cogeneration in
Mauritius
• Predetermined feed-in tariffs for biomass
electricity: Kenya and Uganda recently introduced feedin tariffs for electricity generated from renewable energy
sources
• Mandatory Blending ratios: Best restricted to byproducts and waste products to avoid any food-fuel
conflicts
• Targets: should be realistic, home-grown and local, and
promote incremental contribution of biofuels to energy
supply (e.g. 10% - 20% blending targets using byproducts and waste products)