Africa needs grid-connected electricity fast and in large quantities to deliver power to its 1 billion people and their businesses. But one of the key barriers to connecting more people to more power is one of the missing links in the African energy sector: transmission lines. Sub-Saharan African has the lowest level of transmission infrastructure and the lowest levels of investment in the sector globally.
Our Head of Business Development, Chris Flavin has co-authored a new handbook, ‘Understanding Power Transmission Financing’ which was launched by Power Africa and the U.S. Department of Commerce Commercial Law Development Program at the recent Africa Energy Forum in London. The handbook assesses the state of African’s transmission infrastructure and looks at ways to access the much-needed finance for its development, including by increasing private finance. You can read the report here:
Increasing the quantity and quality of power across Africa is a challenging and complex problem. Despite recent increases in investment in other parts of the power value chain such as generation, private investment in transmission & distribution infrastructure remains far too low.
Utilities in sub-Saharan Africa know they need to develop and upgrade their infrastructure, however, most of these utilities operate at a loss, making them constrained financially. They are both unable to finance transmission lines from their own balance sheet, nor can they secure debt even for financially viable projects.
The critical nature of transmission infrastructure to the overall function of an energy market cannot be overstated. As generation expands, transmission is needed to bring electricity to where it is most needed. Transmission across national borders, often referred to as interconnection, enables economies of scale that bring down the cost of power and allow for greater efficiency in matching production with consumption.
An increase in transmission lines is also vital to helping deliver renewable power to consumers. The geographically-dispersed nature of wind, solar, and hydroelectricity resources means that African needs longer grids and stronger grids that can handle the increased variability of wind and solar power.
The handbook provides insights into the planning process, electricity market considerations, institutional capacity needs, control and ownership issues, risk and responsibility allocations, regulatory issues, enabling environment, and the roles of public and private sector actors at each phase of development. We hope it can be a useful guide to the growing number of investors, governments, donors and utilities committed to making Africa’s transmission infrastructure fit for purpose.