One of the most often asked questions to the Alternative Energy Africa staff is geared toward which African countries are the best for RE investments. While many factors can come into play, such as which sector an investor is looking into (solar, hydro, geothermal, etc.), political climate, regulations, and much more – Alternative Energy Africa has decided to let you in on the top countries to place your investor bets.
The first piece of information any investor should know before venturing into this continent is which countries are actually the largest economic breadwinners. Africa has some of the poorest countries in the world, but it also holds some powerhouses. The top 10 economies in Africa, taken from 2007 data, are:
1.South Africa
2.Egypt
3.Nigeria
4.Algeria
5.Morocco
6.Sudan
7.Angola
8.Libya
9.Tunisia
10.Kenya
Places like Nigeria, Algeria, Sudan, Angola, and Libya are propelled by their hydrocarbon sectors. However, if thinking of investing in its renewable energy sector, South Africa is paving the way with its feed-in tariff (FIT) and other incentives to increase IPPs and PPPs. South Africa’s president Jacob Zuma announced an ambitious goal to reduce the country’s greenhouse gas emissions by 34% by 2020, but some question the aggressive plan (Could South Africa’s Goals be Unrealistic?). Zuma also promised 500,000 jobs would be created by the end of 2009, however, that goal was unmet. If Zuma wants to prove skeptics wrong, a prime opportunity for investors could arise as the Zuma-led government pushes the RE sector further.
Kenya also ranks up there with its geothermal and hydro capacity, and its FIT system was just revised to accommodate more growth in its RE sector. And the government is jumping through hoops to accommodate the local sector with President Mwai Kibaki saying, “The government will continue to put in place strategies, incentives and flagship projects to ensure that the vision’s goals are attained. The government will also constantly review the business environment in order to make it more conducive.”
Tunisia is seeing more investment from the international community as it received a $55-million loan from the World Bank to increase its activity in the renewable energy sector (Tunisia, World Bank Sign $55M Deal for RE). The National Energy Control Agency (NECA) Director General Ben Aissa Ayadi said that Tunisia was planning to increase its renewable energy generation from 0.8% in 2009 to 4.3% by 2014. Last April, Tunisia launched a four-year energy-saving program to reduce energy demand 20% by 2011. The National Agency of Energy Conservation director Mounir Bahri said the plan aims to reduce energy consumption by 3% each year (Tunisia Launches Energy Saving Program). Other projects include Tunisia working with Algeria, Italy, and Malta.
In Morocco, RE is a necessity since the country is the only North African nation that isn’t rich in oil. Moroccan delegations are constantly traveling to some of the world’s leading industrial nations to hold discussions about its plans for the RE sector, and it appears to be working. These talks do not seem to be filler and fluff as investments continue to pour into the North African country’s renewable energy coffers. While many African governments send delegations to developed countries proposing detailed plans for RE, Morocco has made it a point to highlight its plans with a step by step process ensuring completion. This detailed plan mitigates risk and is a major attraction for investors (Morocco’s Secret to Promoting Its Solar Sector).
On the flip side there is Nigeria. Although its interim President Goodluck Jonathan is striving to make quick changes in its power sector, the country’s main theme has been all talk and little action. The US Ambassador to Nigeria Robin Sanders announced that the US will collaborate with Nigeria and the Independent Power Providers Association of Nigeria to increase electricity generation to 10,000 MW by 2011. However, its fragile infrastructure, with elections set to be held next year, leaves investors skeptical, waiting to see if those changes will be implemented and upheld.
Libya and Algeria are less than filling for investor appetite in the RE sector. Libya hopes to reach its goal of generating 10% of renewable energy by 2020, the country is currently at less than 1%. However, in a country report released in December 2009 by the RegionalCenter for Renewable Energy and Energy Efficiency (RCREEE), it was said that these goals might take longer to reach than Renewable Energy Authority of Libya’s goal of 2012. The report said, “Unfortunately, these targets and strategy for renewable energy in Libya do not seem to be fully shared among all participants, despite the approval of the target by the Cabinet. One reason seems to be that the targets and strategy have not been developed from any comprehensive analytical work. This lack of consensus means that the programs and targets of REAOL may not in fact be realized on the time-scale envisaged.”
Algeria, more onboard with the idea of incorporating RE, does not leave much room for foreign investors. Projects in neighboring countries continue to increase with international investors aboard, but things are slow moving in Algeria. The Algerian government has said that it does not want foreigners exploiting its solar energy with projects like the Desertec Initiative and is only interested if local firms play a central role. While the motive behind the decision is great, the country has yet to offer incentives that would help local companies propel the country’s RE industry.
Egypt is Africa’s rock for wind. Egypt is preparing to announce companies chosen to build a 1,000-MW wind farm along the Gulf of Suez coast as the country plans to install at least 7,200 MW of wind energy capacity by 2020. Egyptian-owned company El Sewedy established its wind division, SWEG, in partnership with German wind tower manufacturer SIAG. SWEG will produce wind towers in the North African country (SWEG Breaks Ground on Wind Facility in Egypt) for domestic use and regional exports. However, government initiatives on the RE front have been slow on the uptake. It is also important to remember that presidential elections will be held around Q3 2011, and while the current president Hosni Mubarak’s status quo is expected to continue, it goes without saying that elections do affect economic ventures.
And finally in Africa’s top 10 economies, Sudan comes in with little RE involvement. After the announcement at the end of March that had Solar Euromed and Sudan’s Ministry of Energy and Mining signing an agreement to set up a 2,000-MW solar power plant program, the French company signed a power purchase agreement (PPA) at the beginning of June. This could be a very beneficial step for Solar Euromed as for the most part, RE investors steer clear of the country leaving the French company without competition. The political climate is less than acceptable and mitigating risk seems almost impossible as the ICC continues to call for President Bashir’s arrest and South Sudan vies to become autonomous.
In the next edition of Alternative Energy Africa’s Investor Watch, African countries that have made the global top 10 economic growers list for 2009 will be analyzed.
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