×

Our award-winning reporting has moved

Context provides news and analysis on three of the world’s most critical issues:

climate change, the impact of technology on society, and inclusive economies.

 
Part of: Solar energy
Back to package

Africa battles to get big solar projects on grid

by Reuters
Thursday, 4 August 2016 11:23 GMT

Bulldozers prepare a field for construction on what is slated to be Senegal's largest solar plant in Santhiou Mekhe, Senegal, July 11, 2016. REUTERS/Nellie Peyton

Image Caption and Rights Information

Newness of technology, bureaucratic hurdles and investor fear of uncharted territory have held back roll-out of solar plants

* 3,500 MW of projects planned in Africa but progress slow

* Bureaucratic hurdles, investor fear cloud projects

* Leader Senegal close to building large plant

By Nellie Peyton

SANTHIOU MEKHE, Senegal, Aug 4 (Reuters) - In an expanse of sand 60 miles (100 km) north of Senegal's capital, two men set to work digging up tree stumps to clear space for what could soon be the biggest solar plant in West Africa.

In less than a year, says developer Senergy PV SA, this shrubby lot will be covered with 96,000 gleaming solar panels from China, injecting up to 30 megawatts into the grid.

It is an attractive prospect for a nation with a dire power deficit, and which currently meets most of its needs by burning imported oil in hugely inefficient diesel generators.

"The context is favourable," Karim Ndiaye, investment director at French private equity firm Meridiam, which bought out the original Senergy company in 2014, told Reuters.

"The president has made renewables a priority."

Yet three years after a deal was signed to build the plant, there were still no building materials in sight, just a couple of bulldozers bumping over dunes near Santhiou Mekhe village.

Sunshine is plentiful, solar panels get cheaper by the year and demand for power is skyrocketing, but the newness of the technology, bureaucratic hurdles and investor fear of uncharted territory have held back the rollout of solar plants across Africa.

Solar is less than 1 percent of Africa's power generation. Outside of South Africa and Algeria there are only a few utility-scale solar photovoltaic (PV) plants on the continent, the largest being a 20 MW plant in Ghana.

Reuters collected data on over 3,500 MW of projects that have been commissioned in the past six years - roughly equal to the combined output of Senegal, Uganda, Mali and Cameroon.

In Kenya and Burkina Faso, plants scheduled to open in 2014 are still awaiting construction. In Nigeria and Ghana, projects that began in 2010 and 2011 have yet to find finance.

"We are seeing the same trends everywhere in sub-Saharan Africa," said Silvia Macri, analyst at IHS Markit.

"There's no experience with these projects, and not much clarity around the political framework."

Lenders want dependable cash flows, but in many countries weak legal frameworks, unclear land rights and poor transmission infrastructure make this hard to guarantee, Macri said.

Even after construction began on the Senergy project, equipment still needed to be ordered and permits obtained, said Mathieu Peller, regional director at Meridiam.

"NEED MORE TIME"

Horse carts trot past power lines in rural Senegal. Electricity is costly and 40 percent of people have no access.

Cheap solar could change this.

Since 2009 the price of panels has fallen 80 percent. Last year, the International Renewable Energy Agency said solar power costs were in line with or below those of fossil fuels.

Senegal is ahead of its peers on the continent in at least promoting renewables - its official target is 20 percent of power from renewables by 2017, against 0.6 percent now - but it has been overwhelmed by proposals.

After creating a renewable energy law in 2010 the government spent three years sorting through 82 proposals and accepted 10, most of which lacked the funds to see them through, said Yasser Charafi, an officer at the International Finance Corporation, the private-sector arm of the World Bank.

Senergy PV SA will sell power to the national electric company for about $0.11 per kilowatt-hour, which is slightly less than the utility pays for diesel. The World Bank aims to help Senegal slash that by almost half, Charafi said.

Kenya unveiled a renewable energy scheme in 2012 and was inundated with proposals. No plants are yet under construction.

Now it is considering an auction process to attract lower price bids, leaving developers in the lurch, said Tomas Adcock, chief operating officer at solar firm Kenergy Renewables.

"Investors are anxious about investing in projects that may never be built," Adcock said.

Kenya's Ministry of Energy did not respond to a request for comment. Developers in several countries described a lack of clear policies, pressure to pay bribes, and negotiations that dragged on for years.

There is often no grid in place to transmit, a problem faced by Douglas Coleman, projects director of Blue Energy, building a long-awaited 155 MW plant in Ghana.

A few projects have beaten the odds. A different plant in Ghana was completed in April by Chinese company BXC, and a 10 MW plant in Uganda is almost built, led by firms in Paris and Dubai.

Nigeria signed its first solar power purchase agreements in July for 14 large-scale plants after four years of negotiations. They are now meant to close financing within a year, and finish construction 18 months later.

"To be honest, some might need more time," said Yesufu Alonge, head of power procurement at Nigeria's bulk trader.

(Reporting by Nellie Peyton; Editing by Tim Cocks and Dale Hudson)

Our Standards: The Thomson Reuters Trust Principles.

-->