With Africa remaining vastly under electrified compared to other regions, the role gas will play to improve energy access and ensure energy security across the continent will continue to increase, according to research firm Rystad Energy.
During a webinar hosted by Rystad Energy on Monday entitled ‘How the power mix will evolve over the next 30 years’ the research firm explored how factors such as increases in population, economic activities, geopolitical trends including the Russian-Ukraine war and global climate policies are evolving the African energy market.
“Sub-Saharan Africa is home to nearly two thirds of the world population without electricity access. Population growth in Africa is twice the global population growth rate,” stated Nivedh Thaikoottathil, Power Markets Research Analyst at Rystad Energy, highlighting the need for the continent to expand its power generation portfolio and to accelerate electrification efforts in line with the rapid increase in population and energy demand.
While the demand for coal decreases as African countries including Nigeria and South Africa join the global climate action race, Carlos Torres Diaz, Senior Vice President, Head of Gas and Power Markets Research at Rystad Energy added that “Gas will be used to meet the demand and will continue to play a key role to provide baseload power and to support renewables as well.”
With Nigeria, Africa’s largest economy, announcing its plan to achieve carbon-neutrality by 2060 and South Africa currently developing its climate policy and energy decarbonization strategy, gas is expected to play a key role in diversifying and securing the countries’ energy mix.
Diaz added that: “We are quite optimistic of the role of gas especially in North Africa, where countries such as Algeria and Egypt are already well positioned to expand gas production and to integrate the resource in their energy mix.”
Diaz said in west Africa, Nigeria also has the potential to expand its gas market while in east Africa, countries such as Tanzania and Kenya are well positioned to exploit gas reserves to address domestic energy demand. However, he noted that large-scale gas production will not materialize in Tanzania and Kenya in the short to medium term, but rather in the long term.
Meanwhile, in southern Africa, Mozambique will develop its gas market and infrastructure to be able to supply the international markets such as Europe and Asia, added Diaz.
Despite the continued decline in renewable energy prices and an increase in the penetration of wind and solar, the upfront costs associated with renewable energy deployment remains a huge challenge for African economies to expand renewables deployment. Rystad Energy predicts that massive investments of up to $10 trillion will be required for solar development and of up to $6 trillion for wind energy development. This provides more opportunities for increased use of gas as Africa diversifies its energy mix to address decarbonization and energy security and access issues.
Commenting on the role African gas can play in addressing the anticipated increase in global energy spending to record levels in 2022, due to high commodity energy prices, Diaz said that Africa has an opportunity to assist while also enhancing the monetization of its energy resources. Diaz added that Africa has already started doing that with Egypt, Algeria and the Democratic Republic of Congo, through state-owned oil and gas companies and energy ministries, signing production and gas exportation agreements to Europe via Italy with Eni. He added that discussions are also underway to bring new pipelines that would enable Africa to export gas to Europe.