The East African Power Industry Forum (EAPIC) taking place in Nairobi, Kenya this week highlights not only of the value power offers as an enabler to grow and transform economies, but also of the burgeoning investment and business growth opportunities in Africa’s power sectors – if you know how to navigate the markets.

The prevailing power supply issues in Africa are well documented. Aging electricity infrastructure has become unreliable and more than 30 African countries are experiencing power shortages.

These either force them to resort to expensive short-term fixes, or face power blackouts. Research shows that the economic cost of such power shortages can amount to more than 2% of the country’s GDP.

In recognising that this is not sustainable and to bring about change, government-led initiatives in a number of fast growing and emerging economies across sub-Saharan Africa, in particular, have identified increasing their power capacity as a top priority objective of their national visions.

According to Paul Grota, Director, Power, WSP | Parsons Brinckerhoff, Africa: “In reality, many African countries are faced with the very real challenge of trying to balance their fiscal spending between providing basic services, including electricity – often in very underdeveloped and remote areas – while struggling to keep up with demand for electricity from industries and rapidly growing populations. This demand is expected to increase by more than two-thirds by 2040.”

“That said, the power sectors in a number of African countries have undergone significant transformation over the last decade to unbundle bottlenecks, create more open and competitive markets and attract investments for bankable projects,” adds Grota.

It’s been estimated that $450 billion (±R6.9 trillion) will be needed to build new power generation capacity on the continent over the next 25 years. Africa’s ideal energy mix, however, is not a straightforward answer.

Jay Urban, Director of Power Generation at WSP | Parsons Brinckerhoff, Africa, explains that: “While many African countries are making a concerted push into the sphere of renewable energy, coal and other fossil fuels will continue to be an important part of the mix, at least for base-load power and for the foreseeable future.”

A recent story published by Bloomberg stated that despite low oil, coal and natural gas prices, 2015 saw more global investment into the development of renewable energy ($134 billion) than fossil fired power plants ($80 billion) for the first time.

“This is certainly a significant development, especially in emerging markets. However, in Africa the shortage of base-load power needs to be addressed urgently,” Urban says.

“Solar energy, for example, currently can’t compete with base-load solutions because, while a solar energy plant can feed into the grid during off-peak times (during the day), due to storage capacity challenges these solutions often don’t prove efficient for peak time. Although this is slowly changing with new technology developments for improved Concentrated Solar Power storage, alternatives need to be included in the overall energy mix,” he adds.

Grota adds that because the power situation of every African country is different, pin-pointing an ideal energy mix that could be applied across the board is not so cut and dry.

“The natural reserves of each country differs – one country may be sitting on a wealth of coal, another may have deep oil or natural gas reserves, while other more arid countries lend themselves more towards solar or wind energy power plants. While hydro power has played a significant role in providing a base-load alternative to fossil fuels over the years, drought in much of sub-Saharan Africa has seen these power stations struggle to meet demand as well.

“Given the geography of the continent, rural and remote Africa also presents further opportunities for power producers who have an appetite for owner-managed micro-grids in decentralised market models.”

There is undoubtedly a burgeoning of opportunities in Africa’s power sectors. However, successful investments will require more certainty around state-led resource programmes, prioritisation of these programmes and having an inherent understanding of local market issues and operating environments.

“As Africa’s power sector transitions through various planning and roll-out phases, the pressure of growing demand is on. We want to be a part of the process of identifying and implementing the right solutions, as these are very exciting prospective projects for us – and the continent.” concludes Grota.