“There are a number of large challenges that we face. Provision of energy is a necessary but not sufficient condition to create that kind of growth,” Bridge Capital Refco renewable energy specialist and director Dudley Baylis told CNBC Africa.
“Then you land up in a little bit of a cyclic problem, because do you invest first and then create the GDP growth or does it work the other way around, investing in the energy systems. The problem is that Africa lacks power capacity.”
According to Baylis, most of the world’s wealthy economies have a certain power capacity density that exceeds roughly 2000 watts per capita. For the majority of African countries, however, the figure is at fewer than 1000 watts per capita.
South Africa, for example, has a power capacity density of 890 watts per capita, which is significantly lower when compared to wealthier countries.
“Without that capacity to be able to provide energy on demand means that effectively we land up with an unreliable power system, which is exactly what we’ve experienced in South Africa in recent times,” Baylis added.
In 2008, South African power utility Eskom introduced scheduled electricity blackouts in the country for periods when short supply would put pressure on the electricity grid, also known as “load shedding”.
In the case of Kenya, electricity instability caused a nationwide blackout after a key sub-station tripped, shutting down 400 megawatts of supply. The national interconnected grid and generating system then tripped, causing the blackout.
“The lower down the scale we go in terms of power capacity per capita, the more volatile becomes the ability of an economy to actually generate energy. The more we invest in our power capacity, the more stable our economies become and the more capacity we have to be able to grow. Therefore we create a conducive investor environment,” said Baylis.
Economic growth and productivity is typically non-existent without some provision of energy. Electricity stability and capacity is therefore crucial for investor interests, and in some cases a deciding factor as to whether or not investors will venture into the continent in the long term.
Adequate human capacity is also a core factor in the future of the country’s energy sector.
“We shouldn’t be thinking that the power sector is going to be what will create the employment. The energy that results from that will create the employment long term,” said Baylis.
“But if we want to import the power systems and we want to import the skills from elsewhere to be able to build the power systems we need, we should be doing that, without being fixated on this idea that we have to create jobs in the power sector right now.”