Can Innovative Business Models Revolutionize Africa’s Power Sector?
According to the African Development Bank (AfDB), African countries have the lowest global electricity access rate at slightly above 40%, with over 600 million Africans shut off with no access to electricity.
World Bank bi-annual reports on the state of African economies report that Africa possesses the lowest electricity rate globally. Thus, an improved electricity rate is key to the continent's development, increasing productivity across various industries. With the knowledge of a thriving power sector's role in driving inclusive growth and economic development, several government-backed initiatives and private sector-led innovation are attempting to close the gap in electric power deficiency on the continent.
One is the “Light up & Power Africa (2017 -2022)” campaign by the African Development Bank, with a $12 billion commitment to improving the power sector, while potentially attracting $50 billion in private sector investment. African innovators, such as Kenya’s M-Kopa and Uganda’s Fenix, utilize mobile finance with solar technology and large battery storage to provide over 700,000 solar kits to households on the continent.
As these power firms use innovative business models to provide energy supply, ESI Africa highlights the potency of integrating smart power innovative solutions to revolutionize how power is generated and consumed in Africa. These solutions include:
- Smart metering
- Decentralization of energy production
- Cost-effective renewable energy
- Energy storage improvements
Challenges faced aside from low access to electricity include:
- Lack of affordability of power supply (high per kilowatt cost).
- Low consumption rate
- Mismanagement of utilities
These challenges pose a struggle in the rapid development of African development. In proffering solutions to speeding up power, certain factors are significant:
Leveraging technological systems
Investments in mini-grid tech have been on the rise for scaling up power at expensive grid-based locations in the region. Sub-Saharan countries such as Nigeria and Rwanda are working on reducing policies hindering private-sector investments.
Improved management of utilities
Regardless of the technologies implemented, proper sustenance and management of the sector in regulating electricity prices and reforming policies to encourage private investors on-grid and off-grid power are key. Improvement of utility operations and fostering transparency are also key to ensuring the durability of Africa’s innovative power sector.
Successful implementation and sustenance of smart power technologies and initiatives will depend on setting a powerful regulatory framework in the power sector. Hence, preparation by the continent’s public and private sectors is imperative.
