Although accounting for 17% of the global population, only 2.5% of recorded global deaths resulting from Covid-19 were recorded in Africa by the end of October 2020. This is attributed at least partly to the young median age of the population in many African countries.

Despite relatively low case fatality rates related to Covid-19, Africa experienced a significant economic impact of the pandemic – with only 15% of Africa’s trade occurring within the continent (36% of annual trade volume is with Europe, 14% is with China and 6% is with the United States) and 8.5% of Africa’s GDP stemming from tourism, the economy is closely connected to global markets.

GDP in sub-Saharan Africa is expected to contract by 3% in 2020 and return to 2019 levels in 2021. South Africa, the second-largest economy by GDP on the continent, is particularly affected by the economic slowdown, and is forecast to decline by 7.8% in 2020 and to see only a mild rebound of 3.1% in 2021.

The impact of an economic downturn on the general population and utilities has also reversed some of the progress that had been made on electrification in Africa. Recent analysis from the World Energy Outlook 2020 estimates that 6% of the population of sub-Saharan Africa who already have electricity access will lose the ability to afford basic electricity services during 2020, with those in Nigeria, the Democratic Republic of the Congo and Niger amongst the hardest hit. Meanwhile, the economic impact on entities that have been working to improve electrification means they are also facing serious financial difficulty, further stifling progress.

The impact on demand was significant, driven by the contraction of the economy and measures to contain the pandemic. South Africa, for example, experienced a 23% year-on-year drop in electricity demand in April, and lower, but still significant, reductions in May (14%) and June (5%). Overall, South Africa’s electricity demand is expected to decline by more than 5% in 2020 compared to the previous year. For the whole continent, a demand reduction of around 2% is expected.

The African electricity sector is characterised by its large geography, limited interconnection and trade, improving electrification and prevailing system adequacy issues. In the most recent World Bank Doing Business 2020, customers in 10 of the 24 African participants (42%) experienced on average at least 24 hours of outages over the period May 2018–May 2019, while 19 (79%) experienced at least 2 hours of outages. In comparison, only 5% of European countries had customers experiencing at least 24 hours of outages, while Asia reported 13%.

While some unbundling of utilities has occurred in Africa over recent decades, the majority of countries have vertically integrated utilities with little or no private participation. This limits the development of the grid and generation to public funds from either governments themselves or development finance institutions and export credit agencies. Of the 54 countries in Africa, only ten have unbundled utilities with either an independent transmission system operator or a legally unbundled transmission system. A majority of countries (29 out of 54), however, allow private-sector participation to varying degrees. This includes IEA association members South Africa and Morocco.

While electricity trade between countries is relatively small due to poor interconnection, a number of regional power pools exist to encourage regional co‑operation through the development of projects of regional importance.

The five regional power pools have a wide variation in their range of maturity and activity. Regional pool plans that have been developed and adopted by the East African Power Pool, Southern African Power Pool and West African Power Pool. Although these should be regularly updated to reflect changing assumptions in, inter alia, technology costs, fuel cost, demand growth and policy changes, only the latter two have updated their plans in the last five years. Pool plans play an important role by helping to mobilise funds for the building of projects of regional importance, including interconnectors and multinational hydropower projects. This is important as the level of investment that is needed for Africa to achieve its Sustainable Development Goals for electricity access and clean energy (as per the IEA Sustainable Development Scenario) would require annual investment in the power sector to more than double up to 2040.

Several regional projects made progress during 2020. For example, a contract was awarded for the construction of the 18 MW Gourbassi hydropower project on the Senegal-Mali border, which will be the fifth hydropower project under the Organisation pour la Mise en Valeur du Fleuve Sénégal, otherwise known as the Senegal River Basin Development Authority. The Grand Renaissance Ethiopia Dam also passed a significant milestone in its development, as it saw its first filling following the completion of the lower section of the dam. The first two turbines of the 6 GW hydropower plant are expected to be commissioned towards the end of 2021. The project is a major driver for regional interconnection in the East African Power Pool, with the construction of a 2 000 MW, 1 055 km bipolar HVDC interconnector between Ethiopia and Kenya expected to be completed in early 2021.

Meanwhile, in southern Africa a tender was launched in February 2020 for the construction of an interconnector between Mozambique and Malawi, which would connect Southern African Power Pool member Malawi to the rest of the power pool for the first time.

According to the IEA report World Energy Investment 2020, investment in Africa in 2020 was dominated by renewables. This coincided with announcements on financing and signed contracts for a number of wind, solar, hydro and geothermal projects across the continent. For example, a renewable auction programme for 120 MW of wind and solar projects was launched in Mozambique, while a tender for up to 80 MW of solar PV projects was launched in Togo. Tunisia also awarded a 100 MW project and launched a tender for another 70 MW as a continuation of the international tender it launched in 2018, which has already awarded 500 MW of solar projects. Additionally, several solar PV and wind plants were commissioned in South Africa, where a number of projects from the last bid window of its renewable auction programme in 2015 have come online following the resolution of an impasse between developers and state-owned utility Eskom in 2018.

In addition to generation capacity, utilities in South Africa, Morocco and Senegal have been actively pursuing storage projects to increase the flexibility of their systems, with these entering different phases of development. Senelec, the state-owned utility in Senegal, started feasibility studies for a potential battery storage project at the 159 MW Parc Eolien Taiba N’Diaye wind plant which, when commissioned by the end of 2020, will be the largest wind plant in West Africa. The plant, which will increase the installed capacity in Senegal by 15%, demonstrates the growing need for flexibility in Africa’s power systems, which are both growing and transitioning to cleaner power systems.

Investment in networks and battery storage in Africa, 2020

Openexpand

Investment in generation capacity in Africa, 2020

Openexpand

While load shedding is something that is endured throughout the continent due to capacity shortages, persistent drought and a lack of investment, this has not always been the case in South Africa.

However, after almost 15 years without investment in new capacity and the declining availability of an ageing coal fleet, power shortages first surfaced in 2007 and 2008. At this time, the government was able to act swiftly to increase generation availability and Eskom, the state-owned vertically integrated utility, started construction of two new coal-fired power plants, each 4 800 MW in capacity. Fast forward to 2014, and the current era of load shedding in South Africa began due to the continual decline of the availability of its coal fleet, coupled with continuous delays to its 9 600 MW of coal-fired generation under construction. As a result, a staged approach to load shedding was developed by Eskom in a way that it could address capacity shortages in a fair manner by rotating across all of its customers according to a predefined schedule. The load-shedding schedules comprise eight stages (Stages 1-8), whereby each stage provides for an expected reduction in demand of 1 000 MW. This persisted across 2014 and 2015, before a two-year lull in 2016 and 2017.

However, in 2018 the current electricity crisis in South Africa was demonstrated again via load shedding and has been worsening ever since, culminating in 2019 when load shedding reached Stage 6 (or a capacity shortage of 6 000 MW) for the first time in December of that year. Prior to this, the worst load shedding that had been experienced was Stage 4, or a shortage of 4 000 MW.

At the beginning of 2020 a similar trend continued until demand greatly reduced in late March due to a lockdown to contain Covid-19. The lockdown, one of the hardest in the world, where freedom to travel and non-essential services were severely limited, began on the 27 March 2020 and was gradually relaxed from 1 May in a staged approach. During the initial lockdown, the deviation of net demand from original forecasts was in excess of 11 000 MW, and on average almost 6 000 MW during weekdays.

While the lockdown-induced suppression of demand in South Africa has gradually subsided as the various restrictions have been lifted, the underlying problems of capacity and energy shortage remain. This was revealed when, from July 2020 onwards, intermittent load shedding periods resumed following the relaxation of lockdown restrictions to Level 3, which allowed the resumption of most economic activity.

Hourly load shedding in South Africa, January to October 2020

Openexpand

As of 25 October 2020, 1 240 GWh of load shedding had already occurred in 2020, despite the relief over the period of hardest lockdown. This included 837 hours of load shedding, which is already higher than the 530 hours that occurred in 2019, with estimates1 suggesting that the volume of load shedding for the year has already surpassed that of 2019.

While South Africa has allowed private-sector participation in the electricity industry since 2004 when a single-buyer model was introduced, Eskom has remained a vertically integrated utility. This has opened the way for investment from the private sector, notably the 4.1 GW of connected renewable projects procured through auctions under the Renewable Energy Independent Power Producer Procurement Programme (REIPPP), including 2.1 GW and 1.5 GW of wind and solar PV respectively. However, following an impasse between developers and Eskom, where the state utility and designated single buyer refused to sign power purchase agreements with the selected bidders, combined with a prolonged conclusion to the now-adopted Integrated Resource Plan 2019, no subsequent renewable auction has followed as yet.

South Africa is now actively trying to address its capacity constraints since the most recent electricity crisis and adoption of the Integrated Resource Plan 2019, which led to ministerial determinations for the procurement of around 11.8 GW of new generation capacity. In addition, the government of South Africa released the Economic Reconstruction and Recovery Plan in October 2020, which details the steps to rebuild the economy post-Covid-19, with energy security one of the key components highlighted in the plan.

The plan outlines many ongoing activities in the electricity sector as part of the recovery. This includes the launch of an auction in August 2020 which aims to procure 2 000 MW of firm capacity in the short term to address current capacity shortages. However, these will only begin to have an impact from 2022 onwards. The recovery plan also highlights the push to enable self-generation, where South Africa relaxed regulations in March 2020 that will allow embedded generation with less than 1 MW capacity, such as rooftop PV, to be connected to the grid without obtaining a licence from the regulator.

Meanwhile, the latest bid window (Bid Window 5) of the REIPPP is also expected to be launched before the end of January 2021, which would see the resumption of the programme and lead to the procurement of up to an additional 6 800 MW of renewables in the form of wind and solar PV. In addition, Eskom have launched a tender for an 80 MW/320 MWh battery storage project at a range of locations across the country, which will form part of the first phase of Eskom’s 800 MWh battery storage programme.

The South African government also published its own roadmap for unbundling of the state-owned utility in 2019 in an effort to offer more transparency in the governance of the utility, while improving operations and cutting wasteful expenditure, amongst other proposed benefits. The Department of Public Enterprises proposed a deadline to achieve unbundling at the end of 2021 to which Eskom has committed itself, although the CEO of Eskom did indicate that full legal unbundling may only be achieved in 2023 considering the broad stakeholder consultation required.

References
  1. Estimates are based on publicly released load-shedding schedules; however, exact data were only available for the period from 1 April 2019.