Published on 10 August, 2022

African Energy Chamber, Rystad Energy Discuss Energy Addition in Africa

As a form of prelude to African Energy Week 2022, the African Energy Chamber and Rystad Energy hosted a webinar on ‘Energy Addition in Africa,’ exploring the role of gas, the need to improve financing and how energy integration will make energy poverty history by 2030.

Ahead of this year’s conference, taking place from October 18-21 in Cape Town, African Energy Week (AEW) 2022’s official knowledge partner, Rystad Energy, hosted a webinar in collaboration with the African Energy Chamber (AEC). Under the theme, ‘Energy Addition in Africa,’ the webinar served as a form of prelude to discussions that will be held at the event in Cape Town, exploring the need for a mixed-resource approach in Africa, how the continent can drive electrification and industrialization, and the role institutions such as the proposed African Energy Bank will play in accelerating development.

Moderated by Bimbola Kolawole, Senior Business Development Africa, Rystad Energy, speakers included Per Magnus Nysveen, Head of Analysis, Rystad Energy; Rolake Akinkugbe-Filani, Chief Commercial Officer, Mixta Africa; and NJ Ayuk, Executive Chairman of the AEC.

During the webinar, speakers explored the role every energy resource will play in Africa, with specific emphasis placed on the need for fossil fuel maximization in the short to medium term and increased investment in renewables. Commenting on energy demand and addition trends in Africa, Nysveen stated that, “Both the population and GDP growth will double by 2050, hence, energy demand will also grow. Renewables alone will not be enough to meet the demand and Africa will need a little of everything to address its energy shortages.”

Expanding on this point, Ayuk stated that, “Gas is going to define everything when it comes to energy access. Fossil fuels will play a very big role, but we will see renewables come into play. One of the big things you see with OPEC is that oil will go down, but it will rapidly increase in emerging markets and Africa will be an emerging market through 2050, with a young population driving it. What is going to define the future is the access to capital. Home grown solutions are the ones that will enable energy access in rural areas, not big projects. We have seen big gas discoveries in Africa in countries including Mozambique and Nigeria, and as such, we are going to see fossil fuels driving Africa’s electrification towards renewables.”

Nysveen added that, “Gas-to-power is going to make renewables more affordable. Without gas to power you need storage investments. Gas-to-power and renewables will work together in Africa. The problem with fossil fuels is not the need but the supply side. There are enormous resources in Africa and a lot to still discover but exploration is far too low. Gas is going to live for a much longer time in Africa than other continent and the focus right now is exporting gas. However, authorities should be even more vocal about needing gas for domestic purposes.”

The discussion also explored the best energy solutions to improving electrification in rural areas where consumers do not have access to grid networks. Expanding on the topic, Akinkugbe-Filani provided key insight, stating that, “If we look at energy demand requirements across Africa and we look across urban and semi-urban areas, we have to look at it from different market segments including who are we serving and what resources are closer to the market we are serving. I am a big fan of decentralized energy systems. Solar will play a very big part in this type of energy distribution because it is nimble. The requirements are that you don’t necessarily have to have it run 24/7. Having said that, when you shift to areas that are a lot more urbanized and you start to look at commercial, you need large scale utilities in order to deliver large scale access. Gas will need to serve the needs for heavy industrial operators. I don’t think there is a silver bullet answer, it depends on who requires it, how close is the resource to the market, what is the cost for delivery and can we find sources of finance to deliver that particular resource in a sustainable manner.”

Meanwhile, despite the continent’s gas and renewable potential, development has been slow owing largely to lack of adequate investment in exploration and production. As such, speakers emphasized the need to introduce an African Energy Bank as well as other accessible financial solutions for project developers across the continent.

“We need to start approving projects now to ensure the exploitation of discovered resources is rapid. We can no longer wait for Africa to get funding from Europe. We should be able to work with local funds and start investing in energy access infrastructure,” continued Ayuk.

“The finance is there, what investors need is a pipeline of bankable projects,” Akinkugbe-Filani emphasized.

Commenting on what strategies and polices should be put in place to increase foreign direct investment across Africa’s energy sector, Nysveen explained that governments need to make guarantees because risk tends to be high in Africa. However, differing from Nysveen’s point, Ayuk stated that, “Africa is not the riskiest destination, it is how we define ourselves. We need to encourage free markets. We need to see more drive towards private sector involvement in projects rollout.”

During AEW 2022, discussions on gas, financing and project rollout will be expanded upon, with a suite of regional energy professionals, global investors and both public and private sector investors coming to Cape Town to drive dialogue, network and sign deals.

 AEW 2022 is the AEC’s annual conference, exhibition and networking event. AEW 2022 unites African energy stakeholders with investors and international partners to drive industry growth and development and promote Africa as the destination for energy investments. Key organizations such as the African Petroleum Producers Organization, as well as African heavyweights including Equatorial Guinea and Nigeria, have partnered with AEW, strengthening the role the event will play in Africa’s energy future.

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