There is increasing discussion of the potential for over-supply of utility-scale electricity generation capacity across many of the larger markets in sub-Saharan Africa (SSA). How significant is this trend and what does it mean for priorities in the sector?
The graph below shows analysis of the projected peak capacity surplus or deficit from Power Africa’s recent Transmission Roadmap to 2030. There are lots of assumptions sat behind this analysis and the outputs could be challenged, but the analysis does indeed indicate that a substantial capacity surplus is expected to develop in many of the larger economies across SSA over the next few years. There are examples of countries with the potential for a surplus in East, West, and Southern Africa.
However, at the same time there is plenty of evidence to suggest that additional generation capacity is required. Over recent months there have been instances of Stage 4 load-shedding (i.e. shedding >4 GW) in South Africa, a country than has a large nominal supply surplus. The load-shedding in South Africa has largely been attributed to power plant failures and fuel supply issues. Ghana – often cited as a country with a power supply surplus – has also been suffering load-shedding; this has been attributed to gas supply issues.
As these examples suggest, simply reviewing the peak surplus or deficit does not tell the whole story. What can utilities and governments do to ensure they are better equipped to meet the needs to energy consumers? We could present a long list of actions here, but two areas stand out.
The first of these is the need for improved reporting and asset management:
Effective asset management within utilities can be used to identify deteriorating asset health and other performance risks and to prioritise investments that deliver the greatest improvements to both technical and financial performance.
Regulators can develop reporting requirements so that performance metrics are monitored and in the public domain. This allows regulators to monitor utility performance and to hold utilities to account.
Improved planning processes that account for data on existing asset performance, can also help. Masterplans are often prepared by outside consultants and reflect a snapshot in time. Planning should instead be owned locally and maintained on a continuous basis.
Second, efficiencies can help to make better use of existing assets:
Improved maintenance of assets – facilitated by better data as outlined above – will improve the reliability and longevity of the asset base.
A regional approach to planning and more widespread trading of electricity can help improve the diversity and reliability of supply as well as creating economies of scale across what are in many cases individually small markets.
In the first instance these improvements might mean that existing assets can be used to meet demand without the need for new capacity. However, effective implementation of these measures should result in power being both more affordable and more reliable. This would almost certainly drive demand growth. Fundamentally, there remains a huge supply-side opportunity in SSA’s power sector, as illustrated by the figure below.
What do these mixed signals on the supply-demand balance across SSA tell us? The message is much more nuanced than one of looming over-supply: there is potential for huge demand growth across the continent. But to unlock that demand there is a need to look at the whole system, not just installed MW on the supply-side. Distribution infrastructure needs more attention, initiatives are required to educate end users and to nurture demand growth, and improved operations and maintenance of existing infrastructure are required right along the value chain.