January 24, 2022
Electricity security is in today’s world a critical component for a well-functioning economy. Many African countries rely heavily on fossil fuels for electricity generation, while others have successfully harnessed renewable energy sources – Kenya being an example, with over 80% of its power generation being from renewable energy sources. With the global push to de-carbonise national economies, particularly the power sector, the interdependence of countries through electricity trade will become increasingly important. Countries are now only looking to develop their own clean energy capacity, but will in future, also seek to harness that of neighouring countries through cross-border power trade.
Electricity market structures come in different shapes and forms. Many have given rise to new players, particularly in power generation. Private participation brings advantages but also challenges to a sector that cannot be looked upon in isolation from the broader macroeconomic perspective. What are those advantages and challenges? How do they play out in Sub-Saharan Africa? Contingent liabilities have become a buzz word around infrastructure project development, but what exactly are they and how concerned should governments be? And most importantly, what can be done to tackle them?
As observed by the International Energy Agency’s most recent World Energy Outlook, the Covid-19 crisis has underlined the importance of a reliable, affordable and secure electricity supply that is able to accommodate sudden changes in behaviour and economic activity, while continuing to support vital services. The electricity sector will play a key role in supporting economic recovery, and an increasingly important long-term role in providing the energy that the world needs, as it evolves into a system with lower CO2 emissions and enhanced flexibility.