Decarbonisation, Decentralisation, and Digitalisation
Their impact on the Sub-Saharan African energy sector
The changes caused by the 3D’s, namely Decarbonisation, Decentralisation, and Digitalisation, are already being felt on a global scale, with Europe and North America being front runners in the implementation of new technologies and business models. These changes are not only impacting large utilities in Europe and the US but are also having an enormous impact on large oil and gas corporations such as ExxonMobile, Royal Shell, and Total and other downstream industries like the automotive industry. Multiple industries, including the energy and automotive industries, are shifting their business models as well as their R&D and investment into new technologies that meet not only state-regulated policies, but rather meet consumer expectations to retain as much market share as possible.
Starting with Decarbonisation, sub-Saharan Africa (SSA) is feeling the global pressure of reducing their emissions from dirty energy generation such as coal, oil, and gas. The effects are already being felt in SSA, as a foreign direct investment (FDI) for new generation projects are focused on renewables and energy storage systems (ESS), completely disregarding oil, gas, and coal. It must, however, be noticed that not all carbon-based fuels are equally bad. While there is agreement that both coal and oil need to be phased out, gas has the opportunity to be used as a “bridging” source, enabling the region to reach a higher overall electrification rate. The continent is enriched in natural gas deposits, favouring extraction and power generation using this resource. Moreover, with the increased R&D and investment into green hydrogen, which is produced using renewable energies, gas infrastructure can be repurposed to run on the more energy-dense hydrogen.
Digitalisation, which in the African context, the continent lags the rest of the world. The digitalisation of the energy sector is all about modern, new technology that helps optimise the sector, including software, semiconductors, sensors, etc. These will enable the internet and other digital devices to be directly connected to these new technologies, a process, which is much slower in SSA than in developed countries. The region's energy generation sources are aging, with most coal, oil, and hydro assets registering on average ages of 50 years and beyond. With the continued fall in prices of batteries and renewables, it is becoming increasingly cheaper for larger consumers such as mines to utilise carbon-free technologies rather than fossil-fuel-powered technologies. SSA is enriched in solar power generation potential and will become the core of the region's power systems. The fall in lithium-ion batteries (LIBs) prices is driven by the automobile industry using this technology to power their electric vehicles and thereby increases the application rate of battery energy storage systems (BESS) on the continent. Costs of BESS, solar and other renewables (wind, hydro, hydrogen) will continue to decline which combined will push the trend towards a more digitalised, decentralised energy network.
Decentralisation, which is the process of redistributing power generation away from central grids. This is a global trend as people are growing despondent with public power utilities and the inefficiencies of national centralised grids. The national grids in SSA struggle with poor maintenance, theft, and vandalism further supporting the inherent stability decentralized grids bring. The region's ability to utilise gas as a base-load source, coupled with supply from solar power during peak demand periods and BESS for backup strongly support the development of decentralised grids in remote areas. These decentralised technologies are becoming cheaper and cheaper, making it economically unviable to build large traditional centralised generation units in large parts of the world.
In conclusion, the 3D’s will continue to have an immense impact on the region, driving the implementation of new renewable technologies, specifically in remote locations that are disconnected from the national grids. Sub-Saharan Africa is full of potential and opportunities and can only benefit from a change in the energy space.
