Wind energy investors pivot to Africa

Giant wind turbines churning in the wind are a rare sight in Africa — but that won’t be the case for long.

Until now the meager amounts of investment in African wind energy have predominantly come from governments and foreign donors.

But experts say this is changing fast.

Private investors smell profit in beefing up the continent’s overstretched power grids and swarms of new wind turbines are soon expected to emerge.

If all plans on the table come to fruition, capacity will increase 10-fold.

“When you look at the on-going and planned projects, you see actually over 50 percent of the projects being sponsored by the private sector,” said African Development Bank economist Emelly Mutambatsere.

Today wind makes up 1 percent of electricity production, or just 1.1 gigawatts.

But an additional 10.5 gigawatts is in the pipeline.

According to an African Development Bank study of 76 wind projects, two-thirds are pending.

Liberalization of electricity markets has helped prise open the floodgates for investment.

“The state still plays a big role in a lot of the countries,” Mutambatsere said. “But a number of countries have liberalized to some extent.”

North Africa — including Egypt, Tunisia and Morocco — have led the way. But sub-Saharan Africa is catching up.

This year saw the first large commercial wind farm in the region come online, a 52 megawatt project in Ethiopia.

Further south, South Africa, the continent’s heaviest carbon emitter, is a striking example of the sector’s growth.

The coal-rich nation —gunning for an extra 18 gigawatts of capacity from renewables such as wind — has opened power production projects to private bidders for the first time.

The first bidding round of 28 projects drew $5 billion in investments, according to the Energy Ministry.

“There’s a huge boom going on in South Africa in wind and renewables,” said South African Wind Energy Association CEO Johan van den Berg. “South Africa previously had eight operative wind towers or turbines and there’s about 250 under construction at the moment.”

Last year, investment in South African renewable energy increased in excess of 20,000 percent, he said.

Meanwhile, in Kenya, the $815 million, 300 megawatt Lake Turkana Wind Power Project is hoping to break ground in November.

With wind flow of 11.8 meters per second, Chairman Carlo van Wageningen called the project “a dream.”

According to Richard Doyle of renewable energy consulting firm 3E, tough conditions in key green markets like Europe have played a role in the pivot to Africa.

So too, the healthy returns promised in developing markets.

“There’s been a veritable flood of companies out of their home markets in Europe into developing economies generally, and Africa is one of those focal areas.”

However, he added that any “boom” tag has to be qualified by recognizing conditions elsewhere.

“If markets were less tight in Europe, would as many developers be in Africa? Almost certainly not,” he said.

With just 0.1 percent of the 2011 world market in Africa and the Middle East, the continent is still playing catch-up.

Large upfront costs mean wind is a long way away from overtaking dirtier but cheaper energy sources like coal and gas.

By 2030, wind is only expected to account for 2 percent of Africa’s power mix, according to the International Energy Agency.

Coal is set to remain king at 37 percent, followed by gas at 32 percent.

“It won’t become a dominant power source but it will become an important contributor to the energy mix,” said the ADB’s Mutambatsere.