Rapid growth within West Africa is opening the door for independent power producers (IPPs) to help energy supply meet demand. Frost & Sullivan released a new report, “Investment Opportunities for IPPs in West Africa,” showing that many customers in these countries will be willing to pay a higher tariff for more reliable electricity supply.
“The majority of the region does not have adequate electricity infrastructure to meet this escalating demand; governments have under-invested in electricity infrastructure, which has led to power outages and load shedding on a regular basis,” explained Frost & Sullivan’s Energy and Power Supplies research analyst Tanye ver Loren van Themaat.
The analyst said IPP investment opportunities depended on the uncertainty of gas supply as a result of the region’s gas pipeline problems and gas flaring. IPPs that want to invest in West Africa will first need to ensure that there is reliable gas supply to run its power plants on. “An understanding with the electricity regulator must be reached as to how the electricity tariffs will be structured. The will ensure the power company has a fair chance at making a suitable profit, while keeping the tariffs affordable,” advised van Themaat. “IPPs will need to conduct research about the legal and regulatory environment, as well as how well the deregulation process has been implemented in the countries they want to invest in.”
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