Renewables take off in East Africa but tariffs too high for many – African Business

East Africa’s Renewable Energy Transition: A Sustainable Development Goals (SDG) Perspective

Progress Towards SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action)

East Africa is undergoing a significant transition towards renewable energy, directly contributing to SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). Despite this progress, significant challenges remain in ensuring energy is universally affordable.

• National Achievements: Kenya and Rwanda have made substantial progress, generating 90% and 53% of their electricity from renewable sources, respectively.
• Continental Commitment: At the 2023 Africa Climate Summit, the Accelerated Partnership for Renewables in Africa (APRA) was established, with a commitment to expand the continent’s renewable energy capacity from 56 GW to 300 GW by 2030.
• Resource Potential: The region possesses vast renewable resources. The Rift Valley alone has an estimated geothermal potential of 20,000 MW. Kenya is a leader in this sector, with a geothermal generation capacity of 950 MW as of 2023.
• Partnerships: Progress has been driven by partnerships between national governments and development finance institutions like the African Development Bank and the World Bank, particularly through initiatives such as the Last Mile Connectivity Project.

Barriers to Universal Access: Challenges to SDG 1, SDG 7, and SDG 10

Despite high generation from renewables, high electricity tariffs impede progress towards SDG 1 (No Poverty), SDG 7, and SDG 10 (Reduced Inequalities). The high cost of power remains a primary obstacle for millions of households and small businesses, exacerbating the cost-of-living crisis.

A comparison of electricity costs in the region highlights this disparity:

• Kenya: $0.25 per kWh
• Rwanda: $0.18 per kWh
• Tanzania: $0.087 per kWh
• Ethiopia: $0.003 per kWh

Key factors contributing to high costs and hindering affordability include:

1. High Upfront Costs: Consumers face prohibitive upfront costs for renewable energy equipment such as solar panels and batteries.
2. Taxes and Tariffs: Value-added taxes and high borrowing costs on imported equipment increase the final product cost by as much as 30%.
3. Power Purchase Agreements: Inflexible independent power purchase agreements, often denominated in foreign currencies, expose markets to exchange rate fluctuations.

Socio-Economic Impacts and Links to SDG 3, SDG 5, and SDG 8

The energy access deficit has profound socio-economic consequences, impacting multiple SDGs. An estimated 600 million people in Africa lack electricity access, while 900 million lack access to clean cooking solutions. This directly affects:

• SDG 3 (Good Health and Well-being) & SDG 5 (Gender Equality): A majority of those without clean cooking access are women and girls, who suffer negative health outcomes from inhaling fumes from biomass fuels.
• SDG 8 (Decent Work and Economic Growth): High energy costs drive up operational expenses for businesses, stifling economic growth and job creation. Many households, even when connected to the grid, cannot afford to use electricity for more than basic lighting, limiting its potential to power productive activities.

Policy Imperatives for Advancing SDG 9 (Industry, Innovation and Infrastructure)

To fully leverage the renewable energy transition for sustainable development, experts call for significant policy reforms focused on building resilient infrastructure and fostering industrialisation, in line with SDG 9.

1. Contractual Reforms: Review and renegotiate inflexible power purchase agreements, with a recommendation to denominate contracts in local currencies to mitigate foreign exchange risks.
2. Policy Consistency: Implement clear, consistent, and transparent energy sector policies to encourage market competition, which can help reduce energy service prices.
3. Local Value Chains: Develop local manufacturing and supply chains for renewable energy components. This would advance SDG 8 by creating jobs and SDG 9 by building industrial capacity. Africa currently imports the majority of its solar panels and wind turbines.
4. Value Addition for Green Minerals: Shift the energy-intensive processing of Africa’s critical minerals (e.g., cobalt, lithium, manganese) from overseas back to the continent. This would ensure value addition occurs locally, catalysing industrialisation.

The Critical Role of SDG 17 (Partnerships for the Goals) in Africa’s Energy Future

Achieving a just and equitable energy transition in Africa is contingent on strengthening global partnerships, as outlined in SDG 17. Currently, Africa receives only 2% of global investment in renewable energy, a figure starkly misaligned with its needs and resource potential.

Key demands for international cooperation ahead of COP30 include:

• Increased Climate Finance: A paradigm shift is needed to integrate global climate ambitions with Africa’s right to development and universal energy access.
• Investment Share Growth: A formal call to increase Africa’s share of global renewable energy investments from the current 2% to a minimum of 20%.
• Financial Architecture Reform: Systemic reforms to the global financial architecture are required to address the high borrowing interest rates for African countries, which act as a significant barrier to investment in renewable energy infrastructure.

1. Relevant Sustainable Development Goals (SDGs)

The following SDGs are addressed or connected to the issues highlighted in the article:

• SDG 7: Affordable and Clean Energy

  This is the central theme of the article. It extensively discusses the “clean energy revolution” in East Africa, focusing on renewable sources like wind, solar, hydro, and geothermal power. It addresses energy access, noting that “600 million people… have no access to electricity” and “900 million people do not have access to clean cooking.” The issue of affordability is a key point, with the article highlighting that despite progress in renewables, power remains “painfully expensive” in places like Kenya, where high tariffs are a major concern.

• SDG 1: No Poverty

  The article connects high energy costs directly to poverty and the cost of living. It states that “electricity tariffs have become a flashpoint in the broader cost-of-living crisis” and that in Kenya, “high prices drive up the costs of buying bread, commuting and energy for cooking,” impacting the financial stability of ordinary households.

• SDG 3: Good Health and Well-being

  The article touches on health impacts related to a lack of clean energy. It explicitly mentions that without access to clean cooking, “The majority of them, women and girls, continue to inhale dirty fumes while preparing food,” which has direct negative health consequences.

• SDG 5: Gender Equality

  The article points out the gendered impact of energy poverty, specifying that women and girls are the majority of those who “continue to inhale dirty fumes while preparing food” due to the lack of access to clean cooking solutions.

• SDG 8: Decent Work and Economic Growth

  The article discusses the potential for the renewable energy sector to drive economic growth and create jobs. It highlights the call for “localisation and ownership of supply chains” and manufacturing renewable energy components locally, stating, “we are not benefiting from the jobs that come with renewable energy.” This links the energy transition to creating “climate-resilient livelihoods.”

• SDG 9: Industry, Innovation, and Infrastructure

  The development of energy infrastructure is a core topic, including “wind turbines, solar panels, hydro power stations and geothermal power plants.” The article also discusses the need to use the renewable energy sector as a “catalyst for industrialisation” by investing in local value chains and moving the processing of raw materials back to the continent.

• SDG 13: Climate Action

  The entire article is framed within the context of climate action. It discusses the “First Africa Climate Summit,” the goal to expand renewable energy capacity to combat climate change, and the push for climate finance at COP30 to support Africa’s “just energy transition.”

• SDG 17: Partnerships for the Goals

  The article emphasizes the role of partnerships in advancing the energy transition. It mentions the “Accelerated Partnership for Renewables in Africa (APRA),” collaborations between “governments and development banks like the African Development Bank and the World Bank,” and the call for increased global investment and reform of the global financial architecture to support Africa’s goals.

2. Specific SDG Targets Identified

Based on the article’s content, the following specific SDG targets can be identified:

1. Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services.

   The article directly addresses this target by stating that “About 600 million people, half of the continent’s population, have no access to electricity. At least 900 million people do not have access to clean cooking.” It also highlights the challenge of affordability, noting that in Kenya, “most of the households are connected, but people live in darkness” because “The tariffs are high.”

2. Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix.

   This target is central to the article. It cites the commitment made at the First Africa Climate Summit to “expanding renewable energy capacity from 56 GW today to 300 GW by 2030.” It also provides specific figures for countries like Kenya and Rwanda, which generate “90% and 53% of their electricity from renewable energy sources, respectively.”

3. Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology.

   The article calls for increased international financial support, noting that “Africa receives just 2% of global investment in renewable energy.” It mentions the need for climate finance at COP30 and partnerships with development banks to fund projects like the “Last Mile Connectivity Project.”

4. Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… with a focus on affordable and equitable access for all.

   The article discusses the construction of renewable energy infrastructure (geothermal plants, wind turbines, solar panels) and the need to make this infrastructure “locally sustainable and affordable” to ensure equitable access.

5. Target 13.a: Implement the commitment undertaken by developed-country parties… to a goal of mobilizing jointly $100 billion annually… to address the needs of developing countries in the context of meaningful mitigation actions.

   The article’s focus on the upcoming COP30 summit, where “Africa will again be pushing for climate finance for the energy transition,” directly relates to this target. The call to increase Africa’s share of global renewable energy investments from 2% to 20% underscores the need for developed countries to meet their financial commitments.

3. Indicators for Measuring Progress

The article mentions or implies several indicators that can be used to measure progress towards the identified targets:

1. Indicator 7.1.1: Proportion of population with access to electricity.

   The article provides specific data points for this indicator. It states that “About 600 million people, half of the continent’s population, have no access to electricity.” It also gives a national figure: “In Kenya, we have over 75% access to electricity.”

2. Indicator 7.1.2: Proportion of population with primary reliance on clean fuels and technology.

   This is directly referenced when the article states, “At least 900 million people do not have access to clean cooking.” It also notes that in Kenya, “Many households… prefer cooking using gas and biomass,” which are not clean fuels.

3. Indicator 7.2.1: Renewable energy share in the total final energy consumption.

   The article provides this data for specific countries, stating that Kenya and Rwanda generate “90% and 53% of their electricity from renewable energy sources, respectively.”

4. Indicator 7.b.1: Installed renewable energy-generating capacity in developing countries (in watts per capita).

   The article provides absolute capacity figures that are used to calculate this indicator. It mentions Africa’s current capacity of “56 GW” with a target of “300 GW by 2030,” and Kenya’s geothermal capacity of “950 MW.”

5. Indicator of Affordability (Cost of electricity per kWh).

   While not a formal SDG indicator, the article provides specific quantitative data to measure affordability. It compares electricity costs across countries: “$0.25 per kilowatt hour (kWh) in the country [Kenya], while in Rwanda, it is at 0.18/kWh,” with Ethiopia at “$0.003/kWh” and Tanzania at “$0.087 per kWh.”

6. Indicator 17.3.1: Foreign direct investment (FDI), official development assistance and South-South cooperation as a proportion of total domestic budget.

   This is implied by the article’s discussion of finance flows. It states that “Africa receives just 2% of global investment in renewable energy” and calls for this to be increased, highlighting the gap in international financial support for the continent’s energy transition.

4. Summary Table: SDGs, Targets, and Indicators

Source: african.business