Africa must lead, not follow, other developed and developing nations in meeting the energy requirements of the continent and should prioritise its development agenda ahead of climate concerns.
This is the message from the Energy Indaba 2011 conference held at Sandton Convention Centre this week to debate solutions to bridging the energy gap in Africa, in the context of global challenges around the future of energy in light of climate change and political unrest.
The meeting also concluded that South Africa needs strong leadership to end uncertainty with regard to both the short-term and long-term policy and regulatory framework for the energy sector, which was hampering trade and investment and affecting our economic growth potential.
Keynote speaker Christoph Frei of the World Energy Council summarised the findings and proceedings of the conference in his closing address, saying access to energy and energy security were immediate priorities, given that Africa accounts for half the 1.5-bn people worldwide who do not have access to commercial energy.
Frei said Africa’s energy needs could be likened to a Maslow’s hierarchy and that a survey conducted by the WEC revealed that almost 90% of developing countries and 75% of developed countries agreed that Africa should prioritise energy poverty over the climate agenda or at least link the two.
“Access to energy, supply security, energy costs, environmental issues and social acceptance are not subject to trade-off, but to a hierarchy: we cannot successfully address higher order issues before proposing and implementing solutions for more direct needs,” said Frei. A WEC study also identified the climate agenda as the greatest issue of concern for members, ahead of Middle East dynamics, in terms of uncertainty and its impact on the global energy agenda.
Bankability and bureaucracy also emerged as two of the key challenges for investment in energy infrastructure, especially in relation to South Africa’s renewable energy targets, which depend largely on access to development funding and the implementation of Renewable Energy Feed-In Tariffs (REFIT) to come to fruition.
Frei said key hurdles included specific meso-financing mechanisms, local skills for project initiation, sustainable local ownership models and adequate policy frameworks, while key requirements were financing vehicles for clean rural infrastructure development and skills development for project initiation.
Business and development institutions cited red tape at regional, national and municipal level as obstacles to implementing rural infrastructure and development projects. They said stop-start approaches by the authorities, and delays in signing agreements and obtaining licenses undermined the confidence and buy-in of local communities, who sometimes waited years for projects to get off the ground.
Free market guru Dr Leon Louw, executive director of the Free Market Foundation, said South Africa would pay the price for inefficient energy policy in continued poverty, unemployment and low economic growth rates. Louw said uncertainty in energy policy and supply had already cost South Africa R120-bn or 5% of GDP.
He added that it was essential for government to quantify the outcomes of energy and policy alternatives as accurately as possible by adopting thorough cost-benefit analyses (CBAs) and risk impact assessments (RIAs). These should be independent, actuarial assessments signed off by all government departments and should measure direct and indirect costs and assess the risk of unintended consequences.
Now in its third year, Energy Indaba 2011 has earned a reputation as Africa’s foremost energy event, bringing together the leading players in the energy sector the world over, including business, government, NGOs and academics.
“Planning for next year’s event is already under way, after an extremely stimulating and successful conference and exhibition for 2011,”says Energy Indaba MD, Liz Hart. “We encourage all stakeholders from the energy sector to diarise Energy Indaba 2012 as a strategic priority.”
