africa energy outlook - 2014

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A FOCUS ON ENERGY PROSPECTS IN SUB-SAHARAN AFRICA

World Energy Outlook Special Report

Africa

Energy Outlook


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Secure Sustainable Together

A FOCUS ON ENERGY PROSPECTS IN SUB-SAHARAN AFRICA

World Energy Outlook Special Report

Africa

Energy Outlook


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Foreword 3

Foreword

The primary purpose of our energy system is to contribute to a be er quality of life. Tothose that have it, modern energy unlocks access to improved healthcare, improvededuca on, improved economic opportuni es and, even, longer life. To those that dont, it

is a major constraint on their social and economic development.

The Interna onal Energy Agencys (IEA) Africa Energy Outlook a Special Report in the 2014World Energy Outlook series o ers a most comprehensive analy cal study of energy inAfrica, speci cally in sub-Saharan Africa, the epicentre of the global challenge to overcomeenergy poverty. More than 620 million people live without access to electricity and nearly730 million people use hazardous, ine cient forms of cooking, a reliance which a ectswomen and children dispropor onately. Meanwhile, those who do have access to modernenergy face very high prices for a supply that is both insu cient and unreliable. Overall,

the energy sector of sub-Saharan Africa is not yet able to meet the needs and aspira onsof its ci zens.

But this challenge is surmountable and the bene ts of success are immense. This reportnds that increasing access to reliable, modern energy can turbo-charge economic growth

in sub-Saharan Africa. The regions exis ng energy resources are more than su cient tomeet its overall needs, but they are unevenly distributed and under-developed, a fact thatspeaks strongly towards the bene ts of regional energy integra on, another key nding ofthe report.

Sub-Saharan Africa is already home to several major energy producers, including Nigeria,South Africa and Angola, and these are being joined by emerging producers, includingMozambique and Tanzania. For those in a posi on to reap an economic dividend fromnatural resources, the report highlights the need to reinvest it locally to yield yet greatergains, in the form of broad-based economic growth. African countries more generally areendowed with abundant renewable energy poten al, which they can harness so that, by2040, renewables provide more than 40% of all power genera on capacity in the region,varying in scale from large hydropower dams to mini- and o -grid solu ons in more remoteareas.

The outlook for providing access to electricity is bi er-sweet: nearly one billion people insub-Saharan Africa are projected to gain access by 2040 but, because of rapid popula ongrowth, 530 million people in the region are projected to remain without it at that date(mainly in rural areas). The urgent need to improve access to modern energy is a themethat the World Energy Outlook has pioneered for more than a decade. As a member of theAdvisory Board of the UN Secretary-Generals Sustainable Energy for All ini a ve, I havebeen encouraged to see that much posi ve ac on towards this goal is already underway.And yet this outlook tells us that more is needed.

We iden fy ac ons that can unlock greater levels of energy sector investment. Many ofthese must be taken at the na onal and regional level. They entail strengthening policy

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4 World Energy Outlook | Special Report

and regulatory frameworks so that well-func oning energy markets emerge, building onexis ng channels of regional co-opera on, and, perhaps most importantly, achieving highstandards of governance, both within and beyond the energy sector. The interna onalcommunity has a duty to support ac on in all of these areas: many countries already doso. A valuable extra step will be to make universal access to modern energy one of the

post-2015 sustainable development goals.

I would like to thank Dr Fa h Birol and his team for se ng their aspira ons high this year,and delivering a roadmap for the sub-Saharan energy system that I know will be of greatvalue to policymakers. In comple ng this study, the IEA has been privileged to work withmany African governments, the African Union, the African Development Bank, and manyexperts across all aspects of Africas energy sector, to all of whom we are very grateful.

This publica on is produced under my authority as Execu ve Director of the IEA.

Maria van der Hoeven

Execu ve Director

Interna onal Energy Agency

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Acknowledgements 5

Acknowledgements

This study was prepared by the Directorate of Global Energy Economics of the Interna onalEnergy Agency in co-opera on with other directorates and o ces of the Agency. It wasdesigned and directed by Fa h Birol, Chief Economist of the IEA. Laura Cozzi, Dan Dorner

and Tim

Gould co-ordinated the work. Principal contributors to the report were:Ali Al-Safar , Marco Baroni , Chris an Besson , Alessandro Blasi , Stphanie Bouckaert , Capella Festa , Timur Gl, Soo-Il Kim, Bertrand Magn , Pawe Olejarnik, Kris ne Petrosyan , Nora Selmet , Daniele Sinopoli, Shigeru Suehiro , Timur Topalgoekceli , Johannes Trby , Kees Van Noort , Brent Wanner , David Wilkinson , Georgios Zazias and Shuwei Zhang .Ogar Ugbizi Banbeshie (Nigerian Na onal Petroleum Corpora on), Lucius Mayer-Tasch and Henri Dziomba (Deutsche Gesellscha fr Interna onale Zusammenarbeit [GIZ])and Almag Fira Pradana (University College London) were also part of the Outlook team.Former IEA colleague Uur cal (Ocal Energy Consul ng) provided valuable input to the

analysis. Sandra Mooney and MaryRose Cleere provided essen al support. More detailsabout the team can be found at www.worldenergyoutlook.org .

Robert Priddle carried editorial responsibility.

The study also bene ted from input provided by many IEA experts. In par cular, PhilippeBenoit, Pierre Boileau, Emmanouil Chris nakis, Rebecca Gaghen, Stephen Gallogly,Jean-Yves Garnier, Veronika Gyuricza, Antoine Hal , Didier Houssin, Keisuke Sadamori,Misako Takahashi and Roman Wisznia. Thanks go to the IEAs Communica on andInforma on O ce for their help in producing the nal report, and to Bertrand Sadin and

Anne Mayne for graphics. Debra Justus was the copy editor.

We would like to thank the following organisa ons and individuals for their close co-opera on: African Development Bank (especially Mr. Alex Rugamba and Mr. Monojeet Pal);African Union (especially the Commissioner for Infrastructure and Energy, Dr. Elham Ibrahim,and her o ce, Dr. Hussein Elhag and Mr. Philippe Niyongabo); CITAC Africa Ltd; GIZ;the European Union Energy Ini a ve Partnership Dialogue Facility; the Government ofGermany; the Government of Italy; the Government of Norway; the Government of theUnited Kingdom; the Government of the United States (especially Mr. Andrew Herscowitz

from the Power Africa Ini a ve, the Department of Energy and the Department ofState); Milan Polytechnic, Department of Energy, Italy (especially Professor EmanuelaColombo); the Nigerian Central Bank (especially the Deputy Governor, Dr. Sarah Alade); theNigerian Na onal Petroleum Corpora on (NNPC) (especially Dr. Timothy Okon); the OECDDevelopment Centre; Royal Ins tute of Technology, Division of Energy Systems Analysis,Sweden (KTH-dESA) and their sponsors at the World Bank and the Swedish Interna onalDevelopment Coopera on Agency (SIDA); the Department of Energy, South Africa; and theWorld Economic Forum.

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Relevant data was essen al to bring this study to comple on. Among the African ins tu onsthat regularly submit energy data to the IEA, we are par cularly grateful to the followingthat provided speci c informa on for this Outlook : African Energy Commission (AFREC);SIE-Afrique project; Ministry of Energy and Water, Angola; Ministry of Energy, Benin;Ministry of Water Resources and Energy, Cameroon; Ministry of Energy and Water

Resources, Central African Republic; Ministry of Energy, Congo; Na onal Electric Company,Congo; Ministry of Oil and Energy, Cte dIvoire; Energy Commission, Democra c Republicof Congo; Ministry of Water and Energy, Ethiopia; Energy Commission, Ghana; Ministryof Energy, Guinea; Ministry of Energy, Madagascar; Central Sta s cs O ce, Mauri us;High Commission for Planning, Morocco; Ministry of Energy, Mozambique; Na onalPetroleum Ins tute, Mozambique; Ministry of Energy and Oil, Niger; Energy Commission,Nigeria; Na onal Centre for Energy and Environment, Nigeria; Rwanda Energy, Water andSanita on Ltd; Department of Energy, South Africa; Ministry of Natural Resources andEnergy, Swaziland; Ministry of Energy and Minerals, United Republic of Tanzania; Ministryof Energy and Power Development, Zimbabwe.

Our special thanks go to the following organisa ons, without whose substan al supportand co-opera on this study could not have been achieved: Enel; Eni; the Federal Ministry ofEconomic Coopera on and Development BMZ, Germany; the Foreign and CommonwealthO ce, United Kingdom; Gestore Servizi Energe ci (GSE) S.p.A.; the Ministry of ForeignA airs, Norway; Schlumberger; Shell; and Terna.

The IEA held a high-level workshop in Paris on 14-15 April 2014 to gather essen al input tothis study. The workshop par cipants provided valuable new insights, feedback and datafor this analysis. A session on the Africa Energy Outlook was also organised during theWorld Economic Forum on Africa in Abuja, Nigeria on 7-9 May 2014.

Many high-level government representa ves and experts from outside of the IEA havecontributed to the process, from early consulta ons to reviewing the dra at a later stage,and their comments and sugges ons were of great value. They include:

Emmanuel Ackom United Na ons Environment ProgrammeAbiodun Afolabi Total

Barakat Ahmed African UnionOlivier Appert French Ins tute of PetroleumAndrew Barfour Ministry of Energy and Petroleum, GhanaH.E. Kamel Bennaceur Minister of Industry, Energy and Mines, TunisiaPaul Bertheau Reiner Lemoine Ins tutAndr Kabwe Bibombe Energy Commission, Democra c Republic of CongoAad van Bohemen Ministry of Economic A airs, The NetherlandsFederico Bonaglia Organisa on for Economic Co-opera on and Development

(OECD)

Franois Milere Bouayekon Ministry of Energy and Water Resources, CameroonKeith Bowen EskomNick Bridge Bri sh Ambassador to the OECD/IEA

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Acknowledgements 7

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Oliver Broad Royal Ins tute of Technology (KTH-dESA), SwedenNigel Bruce World Health Organiza onPolicarpo Calupe Ministry of Energy and Water, AngolaPeter Ca elaens EU Energy Ini a ve Partnership Dialogue FacilityPromise Chukwu Energy Commission, Nigeria

Lesley Coldham Tullow OilEmanuela Colombo Department of Energy, Milan PolytechnicPhilippe Constant Project SIE-Afrique Co-ordinator, EconotecClia de Amor Gomes Correia Na onal Petroleum Ins tute, MozambiqueMarney Crainey Foreign and Commonwealth O ce, United KingdomSteve Crossman Foreign and Commonwealth O ce, United KingdomBayaornib Dabire Economic Community of West African StatesCodjo Ber n Djaito Ministry of Energy, BeninJens Drillisch KfW, Germany

Stanislas Drochon IHSHussein Elhag African Energy Commission (AFREC)Jonathan Elkind Department of Energy, United StatesMark Ellio CITAC Africa LimitedMosad Elmissiry New Partnership for Africas Development (NEPAD)Mike Enskat GIZ, GermanyJoseph Kow Essandoh-Yeddu Energy Commission, GhanaLatsoucab Fall World Energy Council, SenegalJean-Pierre Favennec Associa on for the Development of Energy in AfricaFrancis Gatare Government of RwandaFrancesco Ga ei EniAdama Gaye Newforce AfricaElitsa Georgieva CITAC Africa LimitedKlaus Gihr KfW, GermanyAvi Gopstein Department of State, United StatesHaruna Gujba African UnionKlas Heising GIZ, GermanyAndrew Herscowitz Agency for Interna onal Development (Power Africa),

United StatesMark Howells Royal Ins tute of Technology (KTH-dESA), SwedenHans-Pe er Hybbestad StatoilH.E. Elham Ibrahim African UnionRobert Ichord Department of State, United StatesGodknows Igali Ministry of Power, NigeriaKanya Williams James Central Bank of NigeriaMichio Kawamata Mitsubishi Corpora onFabrice Kermorgant General ElectricDaniel Ketoto O ce of the President, KenyaPeter Kiss KPMGJohn Francis Kitonga Ministry of Energy and Minerals, Tanzania

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Joel Nana Kontchou SchlumbergerKen Koyama Ins tute of Energy Economics, JapanMar n Krause United Na ons Development ProgrammeJean Lamy Ministry of Foreign A airs, FranceSteve Lennon Eskom

Teresa Malyshev The Charcoal ProjectWenceslas Mamboundou Ministry of Mines, Petroleum and Hydrocarbons, GabonElizabeth Marabwa Department of Energy, South AfricaThierry de Margerie AlstomLuigi Marras Ministry of Foreign A airs, ItalyLucius Mayer-Tasch GIZ, GermanySusan McDade Sustainable Energy for AllDimitris Men s Royal Ins tute of Technology (KTH-dESA), SwedenRussel Mills Dow Chemical

Vijay Modi Earth Ins tute, Columbia UniversityJacques Moulot African Development BankDiosdado Muatetema Ministry of Mining, Industry and Energy, Equatorial GuineaGrgoire Harmand Ndimba Ministry of Energy and Water Resources, CameroonFrancesco Fuso Nerini Royal Ins tute of Technology (KTH-dESA), SwedenLaura Nhancale Ministry of Energy, MozambiquePhilippe Niyongabo African UnionH.E. Fidel M. Mee Nkogo Deputy Minister of Mining, Industry and Energy,

Equatorial Guinea

Gnter Nooke Ministry for Economic Coopera on and Development,Germany

Pe er Nore Ministry of Foreign A airs, NorwayNick Norton Foreign and Commonwealth O ce, United KingdomTim Okon Nigerian Na onal Petroleum Corpora onCiro Pagano EniMonojeet Pal African Development BankMarilena Petraglia TERNAMario Pezzini OECD

Volkmar P ug SiemensAlmo Pradana University College LondonPamela Quanrud Department of State, United StatesPippo Ranci Florence School of Regula on, European University

Ins tuteAudrey Rojko African Development BankNawfal Saadi Royal Ins tute of Technology (KTH-dESA), SwedenJe rey Sachs Earth Ins tute and United Na onsJamal Saghir World Bank

Jules Schers CIRED, FranceHana-Muriel Se eboun FK GroupPanganayi Sithole Zimbabwe Energy Council

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Henri-Bernard Solignac-Lecomte OECDVignesh Sridharan Royal Ins tute of Technology (KTH-dESA), SwedenEven Stormoen Ministry of Foreign A airs, NorwayGlen Sweetnam Department of Energy, United StatesGodwin Sweto Encorex

Minoru Takada United Na onsMika Takehara Japan Oil, Gas and Metals Na onal Corpora onConstan nos Talio s Royal Ins tute of Technology (KTH-dESA), SwedenWim Thomas ShellMfon Udo a ShellMichel de Vivo Interna onal Organisa on for Large DamsJay Wagner Plexus EnergyH.E. Alhaji Mohammed Wakil Minister of State for Power, NigeriaManuel Welsch Royal Ins tute of Technology (KTH-dESA), Sweden

Rick Westerdale Department of State, United StatesMarcus Wiemann Alliance for Rural Electri ca onFrancis A. Yeboah Energy Commission, GhanaFlorian Ziegler KfW, Germany

The individuals and organisa ons that contributed to this study are not responsible forany opinions or judgments contained within it. All errors and omissions are solely theresponsibility of the IEA.

Comments and ques ons are welcome and should be addressed to:

Dr. Fa h Birol Chief EconomistDirector, Directorate of Global Energy EconomicsInterna onal Energy Agency 9, rue de la Fdra on 75739 Paris Cedex 15 France

Telephone: (33-1) 4057 6670 Email: [email protected]

More informa on about the World Energy Outlook is available atwww.worldenergyoutlook.org

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Table of Contents 11

Table of Contents

Energy in Africa today 19

Context 20Economy 20Demography 24Business environment and infrastructure 25Governance 26

Access to modern energy 27Access to electricity 30Access to clean cooking facilities 34

Overview of energy demand 36Power sector 39End-use sectors 45

Overview of energy resources and supply 47Oil and natural gas 48

Renewables 55Other 60

Energy trade 61

Energy affordability 64

Outlook for African energy to 2040 69

Projecting future developments 70Economic and population growth 70Policy environment 73

Overview of energy demand trends 76

Outlook for the power sector 79Electricity demand 79Electricity supply 81Electricity transmission and trade 86

Outlook for other energy-consuming sectors 86Residential 88Transport 89Productive uses 91

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Foreword 3

Acknowledgements 5

Executive Summary 13Introduction 17

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Outlook for energy supply 93Oil 93Natural gas 98Coal 102Renewables 104

International energy trade 110Crude oil 110Oil products 111Natural gas 112Coal 115

Energy and the environment 116Energy-related CO 2 emissions 117Deforestation and forest degradation 118

African energy issues in focus 121Five features of Africas energy outlook 122

Electricity access: what is the path to power? 122Biomass: here to stay? 131Is oil the way forward for Nigeria? 138South Africa: will energy diversity deliver? 146Mozambique and Tanzania: how to get best value from gas? 154

Building a path to prosperity 161

Towards a better-functioning sub-Saharan energy sector 162Three keys to Africas energy future 165

Investment in the regions energy supply 165Making the most of Africas resources 175Regional energy co-operation and integration 179

An African Century Case 181

Africas energy choices in a global context 184

Annexes 187

Annex A. Tables for Scenario Projections 187A1: Fossil-fuel production 188A2: Demand, electrical capacity and generation, and CO 2 emissions 190A3: Energy access and related investments 222A4: Power sector investments 224A5: Fossil-fuel supply investments 226

Annex B. Definitions 229

Annex C. References 233

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Executive Summary 13

Executve Summary

Sub-Saharan Africa is rich in energy resources, but very poor in energy supply. Makingreliable and a ordable energy widely available is cri cal to the development of a regionthat accounts for 13% of the worlds popula on, but only 4% of its energy demand. Since

2000, sub-Saharan Africa has seen rapid economic growth and energy use has risen by 45%.Many governments are now intensifying their e orts to tackle the numerous regulatoryand poli cal barriers that are holding back investment in domes c energy supply, butinadequate energy infrastructure risks pu ng a brake on urgently needed improvements inliving standards. The data gathered for this World Energy Outlook Special Report the rstof its kind to provide a comprehensive picture of todays sub-Saharan energy sector andits future prospects in a global context underlines the acute scarcity of modern energyservices in many countries. The picture varies widely across the region, but, in sub-SaharanAfrica as a whole, only 290 million out of 915 million people have access to electricity and

the total number without access is rising. E orts to promote electri ca on are gainingmomentum, but are outpaced by popula on growth. Although investment in new energysupply is on the rise, two out of every three dollars put into the sub-Saharan energy sectorsince 2000 have been commi ed to the development of resources for export.

Power to shape the future

A severe shortage of essen al electricity infrastructure is undermining e orts to achievemore rapid social and economic development. For the minority that has a grid connec ontoday, supply is o en unreliable, necessita ng widespread and costly private use ofback-up generators running on diesel or gasoline. Electricity tari s are, in many cases,among the highest in the world and, outside South Africa, losses in poorly maintainedtransmission and distribu on networks are double the world average. Reform programmesare star ng to improve e ciency and to bring in new capital, including from privateinvestors, and grid-based genera on capacity quadruples in our main scenario to 2040,albeit from a very low base of 90 GW today (half of which is in South Africa). Urban areasexperience the largest improvement in the coverage and reliability of centralised electricitysupply. Elsewhere, mini-grid and o -grid systems provide electricity to 70% of those gaining

access in rural areas. Building on successful examples of electri ca on programmes, suchas those in Ghana and Rwanda, the total number without access starts to decline in the2020s and 950 million people gain access to electricity by 2040 a major step forward,but not enough. More than half a billion people, mainly in rural areas, remain withoutelectricity in 2040.

Sub-Saharan Africa starts to unlock its vast renewable energy resources, with almost halfof the growth in electricity genera on to 2040 coming from renewables. Hydropoweraccounts for one- h of todays power supply, but less than 10% of the es mated technicalpoten al has been u lised. The Democra c Republic of Congo, where only 9% of the

popula on has access to electricity, is an example of the co-existence of huge hydropowerpoten al with extreme energy poverty. Poli cal instability, limited access to nance, smallmarket size and weak transmission connec ons with neighbouring countries have all held

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back exploita on of hydro resources. These constraints are gradually being li ed, notleast because of greater regional co-opera on and the emergence of China, alongside thetradi onal lenders, as a major funder of large infrastructure projects. New hydropowercapacity in the Democra c Republic of Congo, Ethiopia, Mozambique and Guinea, amongothers, plays a major role in bringing down the regions average costs of power supply,

reducing the share of oil- red power. Other renewables, led by solar technologies, make agrowing contribu on to supply, with a successful auc on-based procurement programmein South Africa showing how this can be achieved cost e ec vely. Geothermal becomesthe second-largest source of power supply in East Africa, mainly in Kenya and Ethiopia.Two-thirds of the mini-grid and o -grid systems in rural areas in 2040 are powered by solarphotovoltaics, small hydropower or wind. As technology costs come down, the a rac onof renewable systems versus diesel generators grows (although they are o en used incombina on), especially where nancing is available to cover the higher upfront expense.

Bioenergy is at the heart of the energy mix Bioenergy use mainly fuelwood and charcoal outweighs demand for all other formsof energy combined, a picture that changes only gradually even as incomes rise. Fourout of ve people in sub-Saharan Africa rely on the tradi onal use of solid biomass, mainlyfuelwood, for cooking. A 40% rise in demand for bioenergy to 2040 exacerbates strains onthe forestry stock, with e orts to promote more sustainable wood produc on hinderedby the opera on of much of the fuelwood and charcoal supply chain outside the formaleconomy. Scarcity, along with e orts to make alterna ve fuels like lique ed petroleum gasavailable, results in some switching away from wood use, especially in towns. Promo onof more e cient biomass cookstoves reduces the health e ects of pollu on from indoorsmoke. Nonetheless, 650 million people more than one-third of an expanding popula on s ll cook with biomass in an ine cient and hazardous way in 2040.

The rise of the African energy consumer brings a new balance to oil and gas

Almost 30% of global oil and gas discoveries made over the last ve years have been insub-Saharan Africa, re ec ng growing global appe te for African resources. Nigeria isthe richest resource centre of the oil sector, but regulatory uncertainty, militant ac vity

and oil the in the Niger Delta are deterring investment and produc on, so much so thatAngola is set to overtake Nigeria as the regions largest producer of crude oil at least un lthe early 2020s. The value of the es mated 150 thousand barrels lost to oil the each day amoun ng to more than $5 billion per year would be su cient to fund universal access toelectricity for all Nigerians by 2030. A host of smaller producers such as South Sudan, Niger,Ghana, Uganda and Kenya see rising output; but, by the late 2020s, produc on in mostcountries with the excep on of Nigeria is in decline. Addi ons and upgrades to re ningcapacity mean that more of the regions crude supply is processed locally. With regionalproduc on falling back from above 6 million barrels per day (mb/d) in 2020 to 5.3 mb/d

in 2040, but demand for oil products doubling to 4 mb/d an upward trend ampli ed insome countries by subsidised prices the result is to squeeze the regions net contribu onto the global oil balance.

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Executive Summary 15

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Natural gas resource-holders can power domes c economic development and boostexport revenues, but only if the right regula on, prices and infrastructure are in place.The incen ves to use gas within sub-Saharan Africa are expected to grow as power sectorreforms and gas infrastructure projects move ahead but, for the moment, as much gas is

ared as is consumed within the region. More than 1 trillion cubic metres of gas has been

wasted through aring over the years, a volume that if used to provide power wouldbe enough to meet current sub-Saharan electricity needs for more than a decade. In ourmain scenario, natural gas nearly triples its share in the energy mix to 11% by 2040. Nigeriaremains the regions largest gas consumer and producer, but the focus for new gas projectsalso shi s to the east coast and to the huge o shore discoveries in Mozambique andTanzania. The size of these developments and remoteness of their loca on raises ques onsabout how quickly produc on can begin, but they provide a 75 billion cubic metre (bcm)boost to annual regional output (which reaches 230 bcm in total) by 2040, with projectsin Mozambique larger in scale and earlier in realisa on. East coast LNG export is helped

by rela ve proximity to the impor ng markets of Asia, but alongside the bene ts froman es mated $150 billion in scal revenue to 2040 both countries are determined topromote domes c markets for gas, which will need to be built from a very low base.

Coal produc on and use gradually spreads beyond South Africa, but coal is overtakenby oil as the second-largest fuel in the sub-Saharan energy mix. Development of newcoal resources is hindered in many cases by their remoteness and the lack of suitablerailway and port infrastructure, considera ons that also a ect the outlook for SouthAfrica as the exis ng mining areas close to Johannesburg start to deplete. Much of the50% increase in regional output is used locally, o en for power genera on, with cokingcoal from Mozambique the only major new interna onal export ow. Prospects for coalare also limited by policy: South Africa, the dominant player in African coal, is seeking todiversify its power mix with renewables, regional hydropower projects, gas and eventuallyaddi onal nuclear capacity all playing a role in bringing the share of coal in power outputdown from more than 90% today to less than two-thirds by 2040. But coals rela vely lowcost remains an asset in socie es concerned about the a ordability of electricity.

Releasing the energy brake on development

In our main scenario, the sub-Saharan economy quadruples in size and energy demandgrows by 80%, but energy could do much more to act as an engine of inclusive economicand social growth. The interna onal arena brings capital and technology, but mixedblessings in other areas. An oil price above $100 per barrel produces a con nued windfallfor resource-rich countries the cumula ve $3.5 trillion in scal revenue is higher thanthe $3 trillion that is invested in all parts of the regions energy supply to 2040 but fewguarantees that this revenue will be re-invested e ciently, while the regions oil productimport bills grow, along with vulnerability to supply interrup ons. Sub-Saharan Africa isalso in the front line when it comes to the impacts of a changing climate, even though it

con nues to make only a small contribu on to global energy-related CO 2 emissions; itsshare of global emissions rises to 3% in 2040. But the main challenges arise within theregion, including not only the needs of a fast-growing popula on but also the impact of

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weak ins tu ons, a di cult climate for investment, and technical and poli cal barriers toregional trade. Overall, our main scenario outlines an energy system that expands rapidly,but one that s ll struggles to keep pace with the demands placed on it. And, for the poorest,while access to modern energy services grows, hundreds of millions par cularly in ruralcommuni es are le without.

Accelera ng towards an African Century?

Three ac ons in the energy sector, if accompanied by more general governance reforms,could boost the sub-Saharan economy by 30% in 2040, an extra decades worth of growthin per-capita incomes:

n An addi onal $450 billion in power sector investment, reducing power outages byhalf and achieving universal electricity access in urban areas.

n Deeper regional co-opera on and integra on, facilita ng new large-scale genera on

and transmission projects and enabling a further expansion in cross-border trade.n Be er management of resources and revenues, adop ng robust and transparent

processes that allow for more e ec ve use of oil and gas revenues.

Broad improvements in governance, both inside and outside the energy sector, underpinthe achievements of an African Century Case, involving, among many other things, heavyinvestment in the capacity to formulate and implement sound energy policies, as well asthe consulta on and accountability that is essen al to win public consent. Although s ll notachieving universal access to electricity for all of the regions ci zens by 2040, the outcomeis an energy system in which uninterrupted energy supply becomes the expecta on, ratherthan the excep on. Unreliable power supply has been iden ed by African enterprises asthe most pressing obstacle to the growth of their businesses, ahead of access to nance,red tape or corrup on. Relieving this uncertainty helps every dollar of addi onal powersector investment in the African Century Case to boost GDP by an es mated $15.

A modernising and more integrated energy system allows for more e cient use ofresources and brings energy to a greater share of the poorest parts of sub-Saharan Africa.A reduc on in the risks facing investors, as assumed in the African Century Case, makes oiland gas projects more compe ve with produc on in other parts of the world, allowing

more of them to go ahead; and a higher share of the resul ng scal revenue is usedproduc vely to reverse de ciencies in essen al infrastructure. Electricity trade more thantriples as more regional projects advance: 30% of the extra investment in the power sectorgoes to Central Africa, helping to unlock more of the huge remaining hydropower capacityand connect it to the rest of the con nent. The addi on of rela vely low-cost electricitykeeps the average costs of supply down, even as power demand rises by almost one-third.Of the extra 230 million people that gain access to electricity in this Case by 2040, 70%are in rural areas, the supply coming primarily from mini-grid and o -grid systems. Thisinvestment is instrumental in helping to close the gap in energy provision and economicopportunity between sub-Saharan Africas rural communi es and the people in its ci es.Concerted ac on to improve the func oning of the sub-Saharan energy sector is essen alif the 21 st is to become an African century.

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Chapter 1 | Energy in Africa today 19

Chapter 1

Energy in Africa todayResource-full, but not yet power-full

Highl ights Africas energy sector is vital to its development and yet is one of the most poorly

understood parts of the global energy system. Since 2000, much of sub-SaharanAfrica (the focus of this study) has experienced more rapid economic growththan in the past, raising expecta ons of a new phase of development. Policies arebeing put in place in many countries aimed at securing a much-needed expansionin domes c energy provision. However, the current state of the energy systemrepresents a major threat to the realisa on of the regions economic hopes.

Energy demand in sub-Saharan Africa grew by around 45% from 2000 to 2012, butaccounts for only 4% of the world total, despite being home to 13% of the global popula on. Access to modern energy services, though increasing, remains limited:despite many posi ve e orts, more than 620 million people in sub-Saharan Africaremain without access to electricity and nearly 730 million rely on the tradi onaluse of solid biomass for cooking. Electricity consump on per capita is, on average,less than that needed to power a 50-wa light bulb con nuously.

On-grid power genera on capacity was 90 GW in 2012, with around half being in

South Africa. 45% of this capacity is coal (mainly South Africa), 22% hydro, 17% oil(both more evenly spread) and 14% gas (mainly Nigeria). Insu cient, unreliable orinaccessible grid supply has resulted in large-scale private ownership of oil-fuelledgenerators (supplying 16 TWh in 2012) and greater focus on developing mini- ando -grid power systems. Renewables-based capacity is growing rapidly but froma very low base (with the excep on of hydropower). Huge renewable resourcesremain untapped; excellent solar across all of Africa, hydro in many countries, windmainly in coastal areas and geothermal in the East African Ri Valley.

Sub-Saharan Africa produced 5.7 mb/d of oil in 2013, primarily in Nigeria andAngola. While 5.2 mb/d of crude oil were exported, around 1.0 mb/d of oil productswere imported. Natural gas use of 27 bcm in 2012 is similar both to the volume thatwas exported and to the volume that was ared. In the last ve years, nearly 30%of world oil and gas discoveries were made in sub-Saharan Africa; but the challengeto turn these discoveries into produc on and the resul ng revenue into publicbene ts is formidable. Coal produc on (nearly 220 Mtce in 2012) is concentratedin South Africa; and the region accounts for 18% of world uranium supply.

Low incomes, coupled with ine cient and costly forms of energy supply, make

energy a ordability a cri cal issue. Electricity prices are typically very high by worldstandards, despite o en being held below the cost of supply, while oil products aresubsidised in many oil-producing countries.

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ContextAfricas energy sector is vital to its future development and yet remains one of the mostpoorly understood regions within the global energy system. The con nent is huge in scale around the size of the United States, China, India and Europe combined and while ithas energy resources more than su cient to meet domes c needs, more than two-thirdsof its popula on does not have access to modern energy. Those that do have access o enface high prices for supply that is poor quality and rely on an under-developed system thatis not able to meet their needs. The e ec ve development of Africas energy resources,and of the energy sector as a whole, could unlock huge gains across the economy. But howquickly can modern energy be brought to the huge popula on now deprived of it? Howcan exis ng and emerging energy-rich countries maximise the value of their resources?What ac ons in the energy sector can unleash stronger economic and social development?

While this in-depth study presents selected energy data and projec ons for all of Africa,the focus of the analysis and discussion is on sub-Saharan Africa. There is a wide diversityof sub-Saharan countries from those that are energy-resource rich to many that are amongthe worlds most energy poor. It is a region whose energy sector is not well understood,facing challenges that, in many cases, di er from those of North Africa. For example, grossdomes c product (GDP) per capita in North Africa is around two-and-a-half mes that ofsub-Saharan Africa and less than 1% of the popula on are without electricity. In this study,sub-regions for which aggregated data are given include West Africa, Central Africa, EastAfrica and Southern Africa (de ned in Annex B and shown in Figure 1.1).

There are posi ve signs of progress in sub-Saharan Africa, such as economic growth, higherincome per capita and longer life expectancy. Areas of poten al advantage that have yetto be exploited fully include rich natural resource endowments and a growing working-agepopula on. However, there are also myriad challenges, such as high levels of poverty andinequality, a major shortage of infrastructure, poor governance and corrup on, rela velylow levels of produc vity and skills, and varying levels of poli cal stability. Many of thesefactors contribute to a business environment in which it is o en judged di cult and costlyto operate .

Economy

The sub-Saharan economy has more than doubled in size since 2000 to reach $2.7 trillionin 2013 (year-2013 dollars, purchasing power parity [PPP] terms). Yet, even a er suchstrong growth, the economic output of the almost 940 million people in sub-SaharanAfrica in 2013 remains signi cantly below that of the 82 million in Germany (Figure 1.2).Recent sub-Saharan economic growth can be a ributed to a variety of factors, includinga period of rela ve stability and security, improved macroeconomic management, strongdomes c demand driven by a growing middle class, an increased global appe te for Africas

resources (coupled with the rising price of many of these resources), popula on growthand urbanisa on. However, rapid popula on growth has meant that GDP per capita hasincreased more slowly (about 45%).

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Figure 1.1 Map of Africa and main sub-regions for this study

SWAZILAND

MALAWI

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North AfricaWest AfricaCentral AfricaEast AfricaSouthern Africa

km0 500 1 000

This map is without prejudice to the status of or sovereignty over any terr itory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

WesternSahara

(under UNmandate)

Notes: Africa sub-regions are derived from those used by the United Na ons (UN) and the exis ng regionalpower pools (bodies set up to strengthen regional power sector integra on across Africa). For countries thatare members of more than one power pool, such as Tanzania, a decision has been taken to assign it to justone sub-region. This is driven primarily by analy cal considera ons speci c to this study, and so may not beconsistent with other groupings (such as Africas regional economic communi es).

Nigeria and South Africa are the largest economies by far together accoun ng for morethan half of the sub-Saharan economy with Angola, Ethiopia, Sudan and Ghana beingthe next largest. Agriculture remains a large sector in many economies, accoun ng foraround 20% of regional GDP (compared with a 6% share globally) and around 65% ofemployment (AfDB, OECD and UNDP, 2014). But it also remains largely unmodernised,

with huge scope for produc vity gains through the applica on of modern energy. Mining(energy and non-energy commodi es) is an important industry in several sub-Saharaneconomies, both as an employer and as a source of export revenue, with mining output

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typically exported in a raw or semi-processed state. In resource-rich countries, energyexport revenues are an important source of government income but the sector is notnecessarily a large employer, nor does it cons tute a large share of the economy overall.Improved macroeconomic stability has been important in underpinning growth, but it hasnot been achieved uniformly and many countries s ll struggle to balance their budgets.

Figure 1.2 GDP of sub-Saharan Africa and Germany (PPP terms), 2013

German economy: $3.2 trillion

Total sub-Saharan economy: $2.7 trillion

South Africa

Angola Ethiopia

Sudan

Ghana

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C te dIvoire

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EquatorialGuinea

BeninRwanda

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Nigeria

Sources: IMF; IEA analysis.

Rapid economic growth has yet to change the fact that sub-Saharan Africa is home to alarge propor on of the worlds poorest countries (Figure 1.3). Even though increasingaverage incomes across much of sub-Saharan Africa have helped to li a large number ofpeople out of absolute poverty, de ned as living on less than $1.25 per day, sub-SaharanAfrica accounts for 27 out of 36 low income countries and only one high income country(Equatorial Guinea). 1 While the share of the total popula on living in absolute povertyhas declined (from around 56% in 1990 to below 49% in 2010), rapid popula on growthmeans that the number of people s ll living in absolute poverty has actually increased(World Bank, 2014a). Broader measures of human development, such as the Inequality-adjusted Human Development Index (IHDI), also show improvement in many sub-Saharancountries over me while also consistently ranking them very low. 2

1. While average income levels result in Equatorial Guinea being categorised as a high-income country, it suffersfrom many of the issues seen in low-income sub-Saharan countries.

2. In line with the UN Human Development Index (HDI), IHDI takes account of the achievements of a country onhealth, education and income measures, and it also reflects how those achievements are distributed among itscitizens by discounting each dimensions average value according to its level of inequality.

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Figure 1.3 Number of countries by level of national income and number ofpeople in sub-Saharan Africa living on less than $1.25 per day

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From very low levels, sub-Saharan Africa has seen trade and foreign direct investment (FDI)grow rapidly in recent years, with commodi es con nuing to dominate the export picturefor most countries. While the European Union is the largest trade partner, China, India andother emerging markets have been the major drivers of growth, with Chinas total tradewith the sub-Saharan region having increased from around $6 billion in 2000 to $160 billion

in 2013 (Figure 1.4). The role of China is notable both for the increase of bilateral trade,which has grown by more than 25% a year since 2000, and its increasing willingness toinvest in the region, par cularly in oil, gas and other natural resources (Box 1.1), whichaccount for 80% of Chinas imports from Africa (Sun, 2014).

Figure 1.4 Growth in sub-Saharan trade by region

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Box 1.1 Chinas increasing investment in African energy

Chinese engagement in the sub-Saharan energy sector has grown signi cantly inrecent years. In terms of overseas development assistance (just one form of suchengagement), nearly $10 billion is es mated to have owed from China into the sub-

Saharan energy sector from 2005-2011. This is nearly double the level of the EuropeanUnion and several mes that of the United States over the same period, althoughboth of these economies also direct signi cant assistance into North Africa (AidData).FDI in the energy sector is much more di cult to track, but the data available pointsboth to larger overall ows and to a similar picture when comparing across thesemajor economies.

Chinese investment is not spread evenly across the sub-Saharan region, with countriessuch as Angola, Ethiopia, Zimbabwe, South Africa and Nigeria receiving a greater share,

or across projects, with a rela vely small number of hydropower projects receivinglarge sums. Chinas increasing stake in oil and gas plays across Africa is well-known andtakes in both large oil producers, like Angola, and more nascent ones, such as Chad andUganda. It also includes emerging gas producers, as exempli ed by CNPCs purchaseof a 20% stake in a consor um developing part of the Rovuma Basin in Mozambique.

Chinas interest in African energy resources is not restricted to hydrocarbons; Chinesecompanies are among the largest investors in renewables across the con nent,including major hydropower projects, but also solar, wind and biogas. For example,the Export-Import Bank of China has provided nancing for transmission lines relatedto the Gilgel Gibe III hydropower project in Ethiopia and a $500 million project loan tothe Transmission Company of Nigeria (TCN).

Demography

The population changes underway in sub-Saharan Africa have major implications forthe development of the energy sector. Growth is rapid, having increased by 270 millionpeople since 2000 to around 940 million in 2013, and it is expected to reach one billionwell before the end of this decade. This huge increase, concentrated mainly in West and

East Africa, brings new opportunities, such as a rising working-age population, but alsomagnifies many existing challenges, such as the quest to achieve modern energy access.Population growth has been split relatively evenly between urban and rural areas,in contrast to the strong global trend to urbanisation. Only 37% of the sub-Saharanpopulation lives in urban areas one of the lowest shares of any world region whichhas important implications for the approach to solving the energy challenges. Averagelife expectancy has increased by 5.5 years since 2000, to reach 55 years (UNDP, 2013),and the young, working-age population is increasing, with both factors serving to boostthe available labour force. Some elements of the existing energy sector are relativelylabour-intensive, such as charcoal production and distribution, while many aspects ofa modern energy sector instead are capital-intensive, such as power generation and oiland gas production.

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Improving the rela vely poor state of the exis ng energy infrastructure, as a contribu ontowards a more modern energy system, will require a much expanded skilled and semi-skilled workforce throughout the energy sector, including technical skills, as well as skillsrelated to policy, regula on and project management. The need to invest in buildinghuman capacity is increasingly recognised and is re ected in projects such as the EU Energy

Ini a ve Partnership Dialogue Facility (EUEI PDF) and Barefoot College, which trainssolar engineers in rural communi es. Nevertheless, the popula on of sub-Saharan Africareceives less than ve years of schooling on average (UNDP, 2013), sugges ng that the levelof educa on and skills will remain a key challenge.

Business environment and infrastructure

Businesses in sub-Saharan Africa most frequently cite inadequate electricity supply asa major constraint on their e ec ve opera on. It is a widespread problem that a ects

both countries with large domes c energy resources and those that are resource poor.Insu cient and inferior power supply has a large impact on the produc vity of Africanbusinesses (Escribano, Guasch, and Pena, 2010). Examples include:

On average, 4.9% of annual sales are es mated to be lost due to electrical outages,with very high losses reported in the Central African Republic and Nigeria, but muchlower levels in South Africa (Figure 1.5) (World Bank, 2014b).

The use of back-up power genera on to mi gate poor grid-based supply increasescosts for businesses. In 2012, the cost of fuel for back-up genera on (across businesses

and households) is es mated to have been at least $5 billion.Poor quality grid-based supply reduces u lity revenues (non-payment) and makes itmore di cult to increase tari s (of par cular importance to u li es with rates belowtheir costs of supply), thereby constraining the availability of nance for investment.

The problem of inadequate electricity supply is mul faceted: it includes a lack of genera ngcapacity, rundown exis ng stock and limited transmission and distribu on infrastructure.Since GDP growth of nearly 6% per year has been achieved despite poor electricity supply,the vision of economic and social development with ample electricity supply should

mo vate policymakers everywhere (see Chapter 4).

The scarcity of other infrastructure such as roads also presents a massive barrier toeconomic ac vity in sub-Saharan Africa. Only 318 000 km of paved roads exist in theregion (equivalent to around two-thirds of Italys gure) and only 60% of people haveaccess to improved water supplies. The large size and low popula on density of manysub-Saharan countries increases infrastructure costs and constrains the pace ofimprovement. The Programme for Infrastructure Development in Africa (PIDA) iden es aneed for $360 billion programme of infrastructure investment through to 2040, spread across

energy, transport, informa on and communica on technologies (ICT) and trans-boundary

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water resources. 3 Many countries face di cul es in nancing the needed infrastructure,with low domes c savings rates and tax revenues limi ng the available pool of domes c

nance, and the credit ra ngs of many countries (o en below investment grade) deterringinterna onal investors (or at least highligh ng the premium required for them to do so).While interna onal oil and gas companies can o en nance investments from retained

earnings, power genera on and transmission projects are typically more reliant on third-party nance (loans or guarantees). 4 In this respect, funding from development banks,bilateral assistance and so-called south-south investment have all proved important.

Figure 1.5 Duration of electrical outages and impact on business sales inselected countries

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Notes: CAR = Central African Republic. Data is from the latest available business survey for a given country.Sources: World Bank (2014b); IEA analysis.

Governance

One requirement to enable the countries of sub-Saharan Africa to realise their developmentambi ons is the establishment of more e ec ve systems of governance. Governanceshortcomings in the region are well documented: they relate to corrup on, inadequateregulatory and legal frameworks, weak ins tu ons or poor transparency and accountability.But the picture is not uniform across countries. The Mo Ibrahim Founda on produces anindex that monitors changes in more than 130 indicators of governance in sub-Saharancountries. The index reveals an improvement across much of Africa since 2000, but alsowide disparity. For example, Mauri us and Botswana have performed rela vely well, butSomalia and Democra c Republic of Congo (DR Congo) rela vely poorly.

3. PIDA is led by the African Union Commission (AUC), the New Partnership for Africas Development (NEPAD)and the African Development Bank (AfDB).

4. For more on energy sector investment see the IEAs World Energy Investment Outlook Special Report (2014),download at www.worldenergyoutlook.org/investment .

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While concerns regarding poor governance are not exclusive to Africa, such failings areo en cited by businesses as a constraint to invest in the con nent. This is a key issue forthe energy sector because it needs to a ract vast sums of investment and to manage large

nancial ows, including energy export revenues (mainly oil, but also gas, coal, uraniumand electricity), oil product import bills (all countries import oil products) and energy

consump on subsidies. For signi cant natural resource-holders, failing to tackle theseissues will squander available resource-led growth.

Many sub-Saharan countries have made progress in improving energy sector governancebut ac on is, in a number of cases, far from complete. For instance, of the nine countriesin sub-Saharan Africa that currently produce around 100 thousand barrels per day (kb/d)of hydrocarbon liquids or more, ve (Nigeria, Ghana, Gabon, Congo and South Africa) havenew petroleum legisla on under considera on (see Chapter 3 for more on Nigerias e ortsto implement regulatory reform and reduce oil the ), and two (Chad and South Sudan)are in the process of implemen ng petroleum laws already enacted. Power sector reformsare also underway in many sub-Saharan countries, those in Nigeria being one notableexample. An increasing number of African countries have also achieved compliance withthe requirements of the Extrac ve Industries Transparency Ini a ve. In recent years,many interna onal companies have also faced increased pressure from within theirhome jurisdic ons to take further ac on to ensure that they are not complicit with illegalbusiness prac ces in Africa. Transparency and accountability will con nue to be importantfeatures of energy sector decision-making designed to command public acceptance andinterna onal respect (See Chapter 4 on the impact of improved governance).

Access to modern energyEvery advanced economy has required secure access to modern energy to underpin itsdevelopment and growing prosperity. Modern, high quality and reliable energy providesservices such as ligh ng, hea ng, transport, communica on and mechanical power thatsupport educa on, be er health, higher incomes and all-round improvements in thequality of life. Sub-Saharan Africa has yet to conquer the challenge of energy poverty. Butthe barriers to doing so are surmountable and the bene ts of success are immense.

In socie es su ering from energy poverty, such as sub-Saharan Africa, the rst step inassessing future energy demand is to measure the extent to which the popula on of theregion lacks access to modern energy. This issue is cri cal to many other aspects of thisstudy, such as electricity supply, solid biomass use and deforesta on, and the assessmentof the strong posi ve social and economic impact that broader and be er access tomodern energy can provide. It is the key to understanding why, in subsequent chapters,projec ons based simply on an extrapola on of past trends, or even on the basis ofdeclared policy inten ons, would fail to capture this crucial poten al or, expressed anotherway, this huge pent-up energy demand. The Interna onal Energy Agencys (IEA) e ort to

collect comprehensive energy sector data, covering all aspects of the sub-Saharan energysystem (Box 1.2), includes a full update of its energy access database, which es matesna onal, urban and rural popula ons without electricity access.

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Box 1.2 Africas energy sector data 56

An extensive programme of data collec on and reconcilia on has been undertaken forthis in-depth study, with the objec ve of bringing together the best available energyinforma on (See Annex A for detailed energy data and projec ons). In addi on to the

wide range of exis ng data sources to which the IEA has access, new energy surveyshave been carried out for this study. For energy supply, government sources have beensupplemented by data from power u li es, and oil and gas companies. For energydemand, new data has been sourced from many African governments, interna onalorganisa ons, aid agencies (such as the US Agency for Interna onal Developmentand its Power Africa ini a ve, and Germanys Gesellscha fr Interna onaleZusammenarbeit [GIZ]) and, for oil demand and re nery output, from CITACAfrica Ltd. The IEAs energy access database has also been updated. The IEA conductedfact- nding missions to South Africa, Nigeria, Ghana, Mozambique and Ethiopia. Italso hosted interna onal workshops in Paris and Abuja which were a ended by manyAfrican government representa ves and experts.

Africas energy data collec on is improving with e orts such as those by the AfricanEnergy Commission (AFREC) and SIE-Afrique proving important but the situa on s llvaries widely by country and sector. Data on oil and gas produc on, re nery outputand, to a lesser degree, on installed power capacity and electricity genera on, arerela vely reliable, while data on energy trading are not yet adequate. Robust or recentenergy demand data are hard to nd, and in many cases the level of detail is notsu cient to give a clear picture of energy consump on.

Two areas which are par cularly di cult to measure are bioenergy 5 consump onand the use of back-up power 6 genera on. Bioenergy is the largest component of theenergy mix, but much of it is not marketed and there are few surveys measuring itsuse, making it di cult to es mate consump on levels accurately. For this study, IEAdata have been cross-checked using the most comprehensive data available. Analysisof collected energy data sources concludes that fuel consump on for back-up powergenera on is typically included in overall demand data, but that volumes are not thenallocated speci cally as being consumed for this purpose. This study has a emptedto es mate and allocate the volumes of fuel used speci cally for back-up powergenera on.

5. Bioenergy is the energy content in solid, liquid and gaseous products derived from biomass feedstocksand biogas. It covers solid biomass (fuelwood, charcoal, agricultural residues, wood waste and other solidwaste), biofuels (liquid fuels, including ethanol and biodiesel) and biogas.

6. Households and businesses connected to the main power grid may also have some form of back-uppower genera on capacity that can, in the event of disrup on, provide electricity. Back-up generators aretypically fuelled with diesel or gasoline and capacity can be from as li le as a few kilowa s. Such capacity isdis nct from mini- and o -grid systems, without connec ons to the main power grid.

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There is no single interna onally accepted and interna onally adopted de ni on ofmodern energy access. Yet signi cant commonality exists across de ni ons, including:

Household access to a minimum level of electricity.

Household access to safer and more sustainable (i.e. minimum harmful e ects on

health and the environment as possible) cooking and hea ng fuels and stoves.Access to modern energy that enables produc ve economic ac vity, e.g. mechanicalpower for agriculture, tex le and other industries.

Access to modern energy for public services, e.g. electricity for health facili es, schoolsand street ligh ng.

All of these elements are crucial to economic and social development, as are a number ofrelated issues that are some mes referred to collec vely as quality of supply, such astechnical availability, adequacy, reliability, convenience, safety and a ordability.

At di erent points, this study examines all of these aspects of modern energy accessbut its main focus when discussing access is on the household level, and speci callyon two elements: a household having access to electricity and to a rela vely clean, safemeans of cooking (Box 1.3). A lack of access to such services o en results in householdsrelying on expensive, ine cient and hazardous alterna ves. For example, householdscan typically spend 20-25% of their income on kerosene even though the cost of usefulligh ng (measured as $/lumen hour of light) can be 150- mes higher than that provided byincandescent bulbs and 600- mes higher than that from compact uorescent lights. Each

year 4.3 million premature deaths, of which nearly 600 000 are in Africa, can be a ributedto household air pollu on resul ng from the tradi onal use of solid fuels, such as fuelwoodand charcoal (WHO, 2014).

Box 1.3 De ning modern energy access for this study

In the energy modelling results presented in this study, households gaining accessto electricity start from a low base and over me their consump on increases toreach regional average levels. The ini al threshold level of electricity consump on

for rural households is assumed to be 250 kilowa -hours (kWh) per year and forurban households it is 500 kWh per year. Both are calculated based on an assump onof ve people per household. In rural areas, this level of consump on could,for example, provide for the use of a mobile telephone, a fan and two compact

uorescent light bulbs for about ve hours per day. In urban areas, consump onmight also include an e cient refrigerator, a second mobile telephone per householdand another appliance, such as a small television or a computer. The fact thatelectricity consump on grows over me to reach the regional average level isintended to recognise that the minimum threshold level is only su cient to provide

limited access to modern energy services. While these assumed threshold levels forelectricity consump on are consistent with previous World Energy Outlook (WEO) analyses, it is recognised that di erent levels are some mes adopted. Sanchez (2010),

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for example, assumes 120 kWh per person (600 kWh per household, assuming vepeople per household). While the Energy Sector Management Assistance Program(ESMAP) has led the development of a framework that categorises householdelectricity access into six ers based on supply levels ( er 0 being no electricity, ers4 and 5 being greater than 2 000 wa s) and di erent a ributes of supply.

The tradi onal use of biomass for cooking, such as on three-stone res, brings withit several nega ve health and social outcomes, such as indoor air pollu on and the

me-consuming and physically demanding task of fuel collec on (o en su ereddispropor onately by women and children). In our de ni on of modern energyaccess, households also gain access to cooking facili es that are considered safer,more e cient and more environmentally sustainable than the tradi onal facili es thatmake use of solid biomass which is common prac ce across sub-Saharan Africa. 7 Werefer to the progress as having access to clean cooking facili es, where the means

for cooking are typically in the form of either an improved solid biomass cookstoveor a stove that uses alterna ve (cleaner) fuels, such as biogas, lique ed petroleumgas (LPG), ethanol and solar. While improved solid biomass cookstoves are both moree cient than tradi onal three-stone res and produce fewer emissions, they have notbeen shown to deliver health bene ts comparable to those achieved by the use ofalterna ve fuels.

7

Access to electricity

Sub-Saharan Africa has more people living without access to electricity than any other worldregion more than 620 million people, and nearly half of the global total (Figure 1.6). 8 Itis also the only region in the world where the number of people living without electricityis increasing, as rapid popula on growth is outpacing the many posi ve e orts to provideaccess. In 37 sub-Saharan countries the number of people without electricity has increasedsince 2000 while the regional total rose by around 100 million people. On a more posi venote, about 145 million people gained access to electricity since 2000, led by Nigeria,Ethiopia, South Africa, Ghana, Cameroon and Mozambique. Overall, the electricity accessrate for sub-Saharan Africa has improved from 23% in 2000 to 32% in 2012. In North Africa,more than 99% of the total popula on has access to electricity.

Nearly 80% of those lacking access to electricity across sub-Saharan Africa are in ruralareas, an important dis nc on when considering appropriate energy access strategiesand technical solu ons. Around the world, increasing urbanisa on has o en facilitatedincreasing household access to modern energy. While it can play a similar role insub-Saharan Africa, the extent to which this will occur is less clear because, unlike many

7. The traditional use of solid biomass refers to basic technologies used to cook or heat with solid biomass,such as a three-stone fire, often with no or poorly operating chimneys. Modern use of solid biomass refers toimproved cookstoves using solid biomass and modern technologies using processed biomass such as pellets.

8. Annex A3 presents full data tables for access to electricity and clean cooking facilities.

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access to any form of electricity is smaller (see power sec on). Nigerias own targets areto make reliable electricity available to 75% of the popula on by 2020 and 100% by 2030(Energy Commission of Nigeria, 2013). Ghana is among the most successful countries inimproving electricity access, having shown long and strong poli cal commitment since thelaunch of its Na onal Electri ca on Scheme in 1989. Mali, a large and sparsely-populated

country, has seen electricity access reach 27%, with a focus on mini-grid solu ons.Electri ca on rates in Central Africa show very large varia on across the region, from therela vely high levels in Equatorial Guinea (66%), Gabon (60%) and Cameroon (54%) to thevery low levels in Central African Republic (less than 3%), Chad (4%) and DR Congo (9%).Chad is one of many countries where low levels of energy access go hand-in-hand with lowrates of access to other basic services, such as potable water, basic sanita on and pavedroads. This is in spite of the fact that crude oil has become the countrys primary source ofexport earnings. Around 60 million people in DR Congo do not have access to electricity,

even though it has very large hydropower poten al.More than 200 million people in East Africa are without electricity, around 80% of itspopula on. Ethiopia, Kenya and Uganda are among the most populous countries in EastAfrica, and have the largest popula ons both with and without access to electricity. Kenyaestablished a Rural Electri ca on Authority in 2006 with the goal of achieving universalaccess by 2030. As of 2013, 90% of public facili es have access to electricity, but householdaccess remains low. Rwandas electri ca on rate has increased rapidly in recent years(from 6% in 2008 to 17% in 2012). Its Electricity Access Rollout Programme o ers ready-to-use switchboards that can be paid for in instalments and enable low income households toconnect to grid electricity without the need for expensive house wiring.

The picture in the Southern Africa sub-region is skewed by the unique situa on of SouthAfrica: at around 85%, South Africa has the highest electri ca on rate on mainlandsub-Saharan Africa. Around 11% of households do not have access to electricity and afurther 4% rely on illegal access (non-paying) or obtain access informally (from onehousehold to another but paying) (Sta s cs South Africa, 2013). More than three-quartersof households use pre-paid meters, which helps overcome the problem of non-payment.Despite posi ve overall progress to improve access, the most recent Na onal Development

Plan in South Africa warns that reliability of supply has deteriorated and prices are risingquickly. In Mozambique, around 40% of people have access to electricity, either throughthe grid or mini/o -grid systems. The government has promoted solar photovoltaic (PV)and mini-hydropower solu ons in rural areas, repor ng that 700 schools, 600 healthcentres and 800 other public buildings in rural areas now have electricity from solar PV(AllAfrica, 2014). Electricity access in Tanzania increased from around 13% in 2008 to 24%in 2012, with a reduc on in connec on fees (by 40% in urban areas and 60% rural areas)recognised as an important contributory factor.

For those that do have electricity access in sub-Saharan Africa, average residen alelectricity consump on per capita is 317 kWh per year (225 kWh excluding South Africa),equivalent to around half the average level of China, 20% of Europe and 7% of the

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United States. 10 Consump on per capita is signi cantly lower in rural areas, typically inthe range of 50 to 100 kWh per year. For a ve person household, annual consump onof 50 kWh per person could, for instance, allow the use of a mobile phone, two compact

uorescent light bulbs and a fan for ve hours a day. In urban areas, households generallyown more appliances, such as televisions, refrigerators or an electric water heater. There

are also dispari es in consump on levels across and within sub-regions (Figure 1.7).Levels in Central Africa average 220 kWh per capita per year but vary from less than100 kWh in Cameroon to around 900 kWh in Gabon. In Southern Africa, averageconsump on per capita is the highest of all sub-regions, but this is driven principallyby very high levels in South Africa and rela vely high levels in Zambia, Botswana andZimbabwe (all above 500 kWh per capita per year). Levels in Mozambique and Tanzaniaare much lower (below 200 kWh per capita per year).

Figure 1.7 Average electricity consumption per household in sub-SaharanAfrica, 2012, and indicative consumption levels by appliance

500

1 000

1 500

2 000

2 500

W e s t

C e n t r a

l

E a s t

S o u t

h e r n

k W h e r

h o u s e h o l

d

Ligh ngAppliances

Hea ng

L i g h n g a n

d

m o b i l e p h o n e

T e l e v i s i o n F a

n

R e f r i g e r a t o r

W a t e r

h e a t e r

k W h p e r a p p l i a n c e

500

1 000

1 500

2 000

2 500

Cooking

O v e n a n

d

h o t p

l a t e

Notes: The appliances category includes cooling systems. The indica ve electricity consump on levelsshown for various appliances are based on: charging a mobile phone three mes a week; using three10-wa compact uorescent lights for ve hours per day (almost half of light bulbs in sub-Saharan Africa areincandescent); and using a television for four hours per day. The number of people per household varies by

sub-region from below four to almost six.Sources: UNEP (2014); USAID (2014); OECD (2014); IEA analysis.

Excluding South Africa, appliances account for around 70% of residen al electricityconsump on across the other sub-regions, on average. There are an es mated 43 milliontelevisions (equivalent to about one in every four households), 17 million refrigerators(around one in every ten households) and 450 million mobile phones (about one for everytwo people). Ownership of mobile phones in sub-Saharan Africa has risen at a brisk paceand provides access to mul ple services, such as personal and business communica ons

10. Electricity consumption per-capita levels are estimated taking into account residential electricityconsumption and population with electricity access by country.

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and online banking, for rela vely low electricity consump on. In reality, a small share ofhouseholds owns a rela vely large share of electric appliances. An even smaller share useelectricity for water hea ng or cooking, both of which consume rela vely high levels ofelectricity (mainly households in Southern Africa).

Access to clean cooking facili es

Nearly 730 million people in sub-Saharan Africa rely on the tradi onal use of solid biomassfor cooking typically with ine cient stoves in poorly ven lated space. A transi on tocleaner cooking fuels and appliances is not straigh orward, as people who have access tomodern fuels, such as LPG, natural gas, biogas or electricity, may also con nue to use solidbiomass for cultural or a ordability reasons, a phenomenon known as fuel stacking (seeChapter 3).

Five countries Nigeria, Ethiopia, DR Congo, Tanzania and Kenya account for around halfof the sub-Saharan popula on using solid biomass for cooking (Figure 1.8). Although thisseems to suggest that this situa on is concentrated in just a few countries, the reality isvery di erent. In 42 countries, more than half of the popula on relies on solid biomass forcooking needs and in 23 of these the share is above 90%. Nearly three-quarters of thosedependent on solid biomass for cooking live in rural areas and o en devote hours of eachday to collect fuelwood.

Figure1.8 Largest populations relying on the traditional use of solid biomassfor cooking in sub-Saharan Africa by sub-region, 2012

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Note: CAR = Central African Republic.

Sources: World Health Organiza on; IEA databases and analysis.

While this issue is o en given less a en on than that of electricity access, several countries

have implemented programmes to promote clean cooking fuels and stoves. Kenya hasplans to eliminate kerosene use in households by 2022 and has a rela vely developedmarket for improved biomass cookstoves in urban and peri-urban areas (but much less so

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in rural areas). In Senegal, strong policies and incen ves have supported LPG use and lessthan 25% of the urban popula on now uses solid biomass. Ghana has set the ambi ousgoal of providing 50% of households with LPG by 2016, compared to less than 20% today.The picture is less posi ve in Ethiopia, with nearly all rural households and 80% of urbanhouseholds dependent on solid biomass for cooking.

Around 80% of residen al energy demand in sub-Saharan Africa is for cooking, comparedwith around 5% in Organisa on for Economic Co-opera on and Development (OECD)countries. This is due, mainly, to households priori sing energy for cooking (and ligh ng)within very restric ve budgets (when paid for) and the low e ciency of the cookstoves used(typically 10-15% e ciency for a three-stone re, compared to 55% for an LPG cookstove).Es mates of the amount of fuelwood consumed by households di er markedly, bothwithin and across countries, which has a huge impact on es mates of total solid biomassuse (Figure 1.9).

Figure 1.9 Fuelwood consumption per capita per day in selected countries

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3

4

5

BotswanaCameroon

EritreaEthiopia

GhanaKenya

MalawiMali

NigeriaSouth Africa

Zimbabwe

k g p e r

d a y p e r c a p i t a

Median

Maximum

Minimum

Sources: Department of Energy at the Politecnico di Milano; IEA analysis.

The main factors that help explain di ering levels of fuelwood consump on are:

Climate/seasonality consump on can increase in a cold season rela ve to a hot one,while the moisture content of fuelwood also a ects its energy content.

Household size signi cant varia ons in household size a ect consump on pa erns.

Ease of access scarcity of supply tends to reduce waste and overuse; while rela velyeasy access can increase consump on (deforesta on and land degrada on is discussedin Chapter 2).

Popula on density increasing urban popula ons are a key driver of charcoal use,which feeds through to higher levels of fuelwood deple on (see Chapter 2, Box 2.2 oncharcoal produc on and the size of the market).

Availability and price of alterna ve fuels and stoves if solid biomass remains cheapor free rela ve to alterna ves, then increasing incomes may not be a cri cal triggerfor households to switch to modern cooking fuels.

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Alterna ve uses Compe ng uses for solid biomass for other ac vi es (such as brick-making and tobacco curing) can a ect whether it is used for cooking.

Cultural factors and nutri onal habits there is a complex rela onship between solidbiomass consump on, cultural factors and food choices.

There is almost exclusive use of solid biomass for cooking in rural areas (mainly fuelwoodand agricultural waste), but a more diverse use of fuels in urban areas (Figure 1.10). In ruralareas, solid biomass use (mainly in the form of fuelwood and agricultural waste) dominatesin all regions except South Africa, where electricity is commonly used for cooking. Evenin South Africa, tradi onal use of solid biomass is concentrated heavily in rural areas andamong those with the lowest incomes. The choice of fuels for cooking is much more variedin urban areas. Solid biomass is s ll very common, but there is a greater tendency to usecharcoal as it has higher energy content and is easier to transport than fuelwood. Keroseneuse is common in urban parts of Nigeria (where it is supported by subsidies), as well as in

South Africa and Kenya. While LPG use is less common in Nigeria, it is used by one- h ofurban households in the rest of West Africa.

Figure 1.10 Main fuel used by households for cooking

Sources: USAID (2014); Department of Energy, South Africa (2013); WHO (2013); IEA analysis.

Overview of energy demandPrimary energy demand in Africa stood at 739 million tonnes of oil equivalent (Mtoe)in 2012, of which North Africa accounted for 23%. Since 2000, energy demand insub-Saharan Africa has increased by half reaching 570 Mtoe in 2012 but s ll accountsfor only 4% of the world total. While growth in sub-Saharan energy demand has outpacedthat in the rest of the world, it has lagged behind economic expansion, as in many countriesit was led by sectors with rela vely low energy intensity such as tourism and agriculture.

The energy intensity of the sub-Saharan economy has decreased by around 2.5% per yearsince 2000, but remains signi cantly higher than North Africa and is more than double theworld average. The regions largest energy demand centres are Nigeria (141 Mtoe) and

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South Africa (141 Mtoe) together accoun ng for more than 40% of total demand (but onlya quarter of the popula on) (Figure 1.11). Ethiopia, the next largest consumer, is a distantthird (45 Mtoe), followed by Tanzania, DR Congo and Kenya.

Energy use per capita is, on average, one-third of the world average (2.1 tonnes of oilequivalent [toe] per capita excluding sub-Saharan Africa) and only half of the level ofdeveloping Asia, the worlds second most energy-poor region. Only South Africas per capitaenergy demand exceeds the world average, while Nigerias demand per capita is lower thanthat of Gabon and Mauri us. Ethiopia, DR Congo, Tanzania and Kenya also have rela velylarge popula ons but low demand on a per-capita basis. Across sub-Saharan

africa energy outlook - 2014

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