A sustainable recovery: Covid-19 and renewable energy in Africa

In times of crisis like we are experiencing today, marked by the Covid-19 emergency, access to electric power plays a critical role in guaranteeing essential services to any country’s population. This is especially true in Africa, where the energy sector is often inadequate and vulnerable. The impact of the pandemic on the continent could compromise the noteworthy advances in access to energy made in recent years. Specifically, the global economic crisis and the resulting drop in energy consumption had made it harder for many domestic customers and companies to pay for energy services. As a result, African utilities, some which already found themselves in dire financial straits, could have added problems of liquidity, jeopardizing countless jobs and investments, and cutting off or slowing down access to energy for citizens. But what role will renewable energy sources play in all this? How can they contribute to the post-Covid-19 recovery, and more generally to improving the quality of life for the African population? What policies and actions targeting energy access should African governments adopt so the continent can overcome the crisis while promoting sustainable, long-term growth?

Today, 600 million people live in sub-Saharan Africa, the equivalent of half of the entire African population. But for hundreds of millions, access to energy is insufficient or unreliable. What’s more, around 900 million people (over 70% of the continent’s population) do not have access to clean energy for domestic use; instead they have to rely on traditional biomass energy sources. The resulting air pollution causes nearly a half a million premature deaths every year. In the coming years, energy demand in Africa will grow twice as fast as the global average, mainly due to the demographic and economic boom on the continent. This means that it’s even more urgent to build energy infrastructure that can provide access to clean energy for the entire population, and more broadly speaking, promote sustainable development.

SDA Bocconi conducted the study: The impact of Covid-19 on Africa’s energy sector, in collaboration with RES4Africa Foundation and the UN Economic Commission for Africa (UNECA). We explored sources of renewable energy and the role they can play in the recovery phase following the Covid-19 emergency. This role will be critical to developing a more sustainable energy system from an economic standpoint, in addition to guaranteeing an efficient healthcare system, the availability of adequate food resources and quality education for Africans.

Although the spread of Covid-19 was less extensive in Africa compared to other areas of the world (2.67% of global infections and 1.2% of the global mortality rate), our study revealed that the pandemic is having a major impact on African countries, which are suffering dramatically because of their dependence other economies, plummeting prices on commodities, and the closure of commercial and industrial activities due to lockdowns. As a result, according to UNECA estimates, the growth rate of Africa’s GDP in 2020 is projected to drop from 3.2% to 1.8% (contracting by 1.4%). But if the shock level rises, the GDP should shrink by as much as 2.5%. Slower growth in the African economy could have serious implications on efforts to reduce poverty and expand employment. Indeed, the number of people who may fall back into extreme poverty could range from 5 to 29 million.

Looking at what’s happening in the rest of the world, where lockdowns and the consequent economic crisis has led to a sharp decline in energy demand, in Africa the situation is very different. In fact, the downturn in demand for electricity in the early months of 2020 was more limited. This can be explained primarily by an energy system that is far from stable and an energy-intensive economy, relatively speaking (Figure 1).

Figure 1 – an overview of electricity consumption by sector, and access to electricity, in the African countries in the study

Despite all this, it is difficult to identify a common trend across the different countries in our study. In fact, our data underscore that in countries with limited energy access such as Mozambique and the Democratic Republic of the Congo, the demand for electric energy in the early months of 2020 was even higher than in previous years, thanks in large part to recent progress achieved in the energy access in percentage terms. On the other hand, in some countries like South Africa and Namibia, where nearly the entire population has access to energy, demand saw a dramatic drop, similar to what happened in the rest of the world (Figure 2).

Figure 2 – trend in the demand for electricity in select African countries (data in megawatts)

At a global level, renewable sources were the only type of energy to see an uptick in demand in the first quarter of 2020, and the only source projected to grow. Looking to the future, the recent collapse in crude oil prices triggered by Covid-19 may represent an unparalleled opportunity for investors to focus more attention on clean energy sources.

In the current scenario, the proliferation of solutions based on renewable energy may represent a critical contribution to supporting Africa’s post-Covid recovery and improving the quality of life for millions. Leading African politicians and policymakers find themselves facing a historic opportunity to coordinate their recovery initiatives in response to the pandemic, in order to intensify their efforts to achieve Sustainable Development Goal 7: to ensure access to reliable, sustainable and modern energy to all by 2030. This means creating various types of incentives, to include an economic stimulus, aimed at accelerating decarbonization and transitioning to green energy; building more resilient and efficient energy infrastructure with an accent on innovation and flexibility; and implementing decentralized energy solutions that use renewable sources of energy.

On the research front, SDA Bocconi’s Africa Lab will:

• continue to track the development of the energy system in Africa (also in the post-Covid phase) and investments in renewable energy;
• concentrate on the sustainability of the most upstream segment of the energy sector, i.e. mining in Africa of raw materials such as cobalt that are essential in the production of numerous green technologies, from wind turbines to electric cars.