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RE: A Real World Challenge for STEEMIT
It is a problem, solar power and wind power need to be captured and used in Africa @beantownboy
Africa does not have the water and the dams that are there not many more have been raised to my knowledge in the past few years.
All new homes should be built with solar energy which we have plenty of, it is the initial outlay of funding that will be a huge problem for the poverty stricken continent.
I agree with you that solar and wind need to be rolled out in Africa, along with other renewable energy technologies which fit the available resources (and I wouldn't be staking my business in real life on that idea if I didn't believe that! Just to be a bit persnickety - there are many countries in Africa which have excellent hydropower potential as well as existing capacity, but more than a few of them need to improve their capability to manage those resources. Smaller hydropower solutions can work well, as can wind, solar, biogas and other renewable technologies, where the supply addresses the demand in a sustainable way. One of the constructs we have to get away from is the idea that only a state-owned utility can supply communities with electricity. The US grid started out as a collection of microgrids that eventually overlapped each other, allowing the creation of interlinked networks and power pools. There are a lot of clever people out there doing clever things to make similar solutions a reality in Africa.
When I worked at Deloitte Consulting we did a project for Eskom. That big dam in Congo can supply the whole Africa with power.
We hydropower geeks call Inga (which could supply as much as 45GW to Africa - that's more than South Africa's entire installed capacity) a hydropower engineer's wet dream. Just saying. It's been studied to death for over half a century, and every engineering firm with bravado wants a piece of the work that would result if the project was financed.
I've been involved in a number of initiatives around getting Inga going, including an international roundtable convened by the African Development Bank, and the key problem is bankability of the project in a country which is so unstable. To be bankable, an infrastructure project needs to have creditworthy offtakers (customers). The main customers for this project would be SNEL (DRC's utility) and other regional electric utilities, all of which are in precarious financial situations, so not considered creditworthy.
That now includes Eskom, although in the 1990s Eskom was much stronger financially.
It's unfortunately too difficult for financiers in the current financial world to structure a project which would supply multiple private sector clients (who couldn't possibly take 45GW anyway) who might possibly be creditworthy, and to provide the financial guarantees and supports to the utilities which could buy Inga-generated electricity, which would be REALLY cheap to generate, probably just a couple of US cents/kWh. That would determine the selling price to customers, who would pay the running costs plus a reasonable margin for the energy they would buy.
If you consider hydropower to cost at least $1m/MW, or $1bn/GW, installed to build (just for simple numbers - all in, and including the long transmission lines, the investment cost would be higher), you'd be looking at a minimum of $45bn for the project. That's beyond the capacity of the multilateral development banks to finance, the DRC doesn't have that money and can't raise it and the Southern African Power Pool, as a potential offtaker, runs on about $5m a year in revenues.
You HAVE been reading my files!
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So sad, why doesn't some big investment bank from America come to the party? How much of the wattage do you think will survive the long journey?
It's all about the ability of customers to pay - that big American investment bank (if there is one with $45bn to invest) wouldn't be able to recover its investment through revenues...from those customers which can't pay....
Who will be the customers?
The primary customers would be electricity utilities in the region. Most of them are technically it really bankrupt and wouldn't give the lenders any comfort they'd be able to pay for the electricity they would buy over the years.
At one point there was an initiative called Westcor for five utilities (from DRC, Angola, Namibia, Botswana and South Africa if memory serves, which it might not) to build DC transmission lines through a Western Corridor (hence the name) to bring Inga electrons to those utilities. It didn't succeed for reasons I won't go into here, but in part because the proponents didn't follow the basics of infrastructure project finance. A real pity - in many ways it was a good idea.
could be a case of Dutch Disease too.
And one of the biggest challenges, which cryptocurrency could be instrumental in addressing, is that the customers of those customers (i.e. people buying electricity from their electricity company) aren't considered "creditworthy" under the current conventional financial system. Until the actual customers can be considered able and willing to pay for the electricity they consume, new projects will continue to be difficult to finance under traditional infrastructure project finance mechanisms, and utilities will be difficult to finance under corporate finance as the metrics for repayment to the lenders just won't be there. There are so many ways crypto could address this combination of challenges, in part by changing the payment ecosystem that electricity consumers live in.
Makes sense.
But they would not let it run, Africa loves big projects on paper...how i wish we can see the enormous potentials wasting away in Africa.
What are some of the other ones would you say? Thanks for connecting on here. I hope you have a WONDERFUL day!! 😝 😛
Great article, thank you for sharing. One of the largest issues that I see is saying "Africa" is like saying North America (Mexico, U.S., and Canada). Too many countries and bureaucracies to deal with for one solution to a problem deal with one issue, that being electricity. However, I do believe that cryptocurrencies could in-fact break down some barriers for each of these countries or regions with like-minded goals.
Hello @clarkwb02; you are absolutely right. The common ISSUE that, basically, all African countries are facing is inaccessibility (by the vast majority of their respective populations) to electricity--which severely constrains economic development, has an adverse impact on health and education, etc. While the SOLUTIONS need to be tailored, there are, nevertheless, some common threads. First and foremost, there is an absolute need for private initiative and capital; governments don't have deep enough pockets or visionary thinkers / leaders--and, too many vested interests. Second, solutions must address the issue of affordability and payment systems that "fit" the economic environments and customer bases (a real potential role for cryptocurrencies and blockchain technology here I should think). Finally, any solution must be both commercially and financially viable--otherwise, it is doomed to failure.
They would not like Cryptocurrency to run, because of its transparency.....but soon the future will tell
You're so right, @clarkwb02. Africa has 54 sovereign countries, many still untangling their colonial legacies after decades of political, but not economic, independence. That's a lot of different governance structures.
Hello @kiligirl; have you been reading my files?
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Have you been reading mine? 😉
Absolutely; cost is a real challenge. But it is beginning to be addressed in many innovative ways. Also an issue is the "intermittency" of renewable technologies--ie, what happens when the sun doesn't shine or the wind doesn't blow! Storage costs are still high, though they are coming down. We will definitely see a future in which cost competitive renewables can be used on a 24/7 basis--in Africa!
On intermittency, spot on. As we know, the clever inventive people out there are coming up with clever inventive solutions to get over storage and transient issues. And I love your vision for a future Africa where we have cost competitive renewables used on a 24/7 basis!