Africa Needs More Than $350 Billion To Invest In Electricity Infrastructures - Report

Sub-Saharan Africa will need more than $350 billion in investment in its power sector if it is to reach all its residents, with off-grid generation accounting for one-fifth of the total.

According to Bloomberg, the consultant Wood MacKenzie Ltd. said that the number of people in the area who have access to electricity has increased considerably over the last decade, yet around 600 million still do not.

It went further to say that to fulfill the United Nations' objective of universal access by 2030, further development is needed not just in grid link-ups but also in off-grid systems that use sources such as solar energy.

In a note today, WoodMac analyst Benjamin Attia said that "decentralized, bottom-up solar-and-storage networks might not only transform Africa's energy future but also offer critical lessons for the next generation of thinking on utility business models internationally."

Most public electricity providers in Sub-Saharan Africa are losing money, making it difficult to maintain current infrastructure or invest in new ones.

South African utility Eskom Holdings SOC Ltd. is a prime example, struggling to satisfy demand with an aging network of coal-fired power plants.

Corporations that work in mining and other industries are developing their own power sources so that they can provide more reliable electricity.

According to WoodMac, cleaner, modular power solutions will enable many countries to phase out diesel-fueled backup generators.

As solar and battery storage prices fall, utilities' current rates will lose their economic advantage as more people use them.

Attia said that if a lot of people leave the grid, it could be bad for the utilities.

Some people might try to keep them by cutting prices, focusing on their needs, switching to flexible customer solutions, and going into the solar business on their own.

"Estimated total investment potential" for on-and off-grid power is $350 billion if Sub-Saharan Africa is to achieve universal access to electricity by 2030.

With rising consumption from a growing population, "service providers are moving directly to the bankable portions" of household and commercial demand, employing "renewable, off-grid solutions that do not include the public utility, the statement concluded.