Coming back from a trip to East Africa two impressions and one conclusion stayed with me: for the first time in decades there will be a electricity surplus in East Africa and Kenyans are great innovators (Uber watch out!).
The conclusion: There is a great opportunity for electric vehicles!
Coming from a supposedly “green” Germany, that still generates around 40% of its power from coal – it struck me that East Africa is almost completely based on renewable power with a diversified base: hydro, geothermal, wind and solar resources.
In Kenya, the 310 MW windpark Lake Turkana is on the grid, electricity supply/demand is balanced, thermal plants are only switched on as peaking plants and Kenya therefore uses almost only renewable energy – great success and good for the industry and country.
Uganda will enter a time of oversupply for the coming years considering that the state-run hydros Isimba and Karuma that will almost double the existing capacity will get on the grid in February and December 2019 respectively.
Uganda aims to export large quantities of electricity – but I wonder to where?
As Kenya is balanced and Ethiopia also pursues an export-led model with the Ethiopian-Kenyan interconnector to be completed in 2019 and a 400MW PPA signed, Tanzania could take some power but the KE/TZ-interconnector is not ready and is TZ willing to pay for imports when its one utility still has arrears with local IPPs?
In Ethiopia, the completion of the Great Renaissance Dam with a name plate capacity of 6,000 MW has been delayed and somehow its completion date and capacity factor seem to be a mystery: from “will never be completed” to “max. capacity of 2,000”. In any case, Ethiopia has huge potential of hydro, geothermal, wind and solar resources, which it started to develop also with IPPs.
From energy to transport
Uber works fine most of the time in Nairobi. But what really struck me was the fact that there at least 3 local competitors that offer a similar mobile/web based services, some of them cheaper than Uber and creating a huge competition.
So, I wondered about the upcoming IPO of Uber, which targets a valuation of around USD 100bn. Be aware: this business model is easily to be copied as you can experience in Nairobi. Either Kenyans will expand their electronic transport platforms into other countries or these markets are likely to have similar homegrown solutions!
With a surplus of electricity and innovations in transport, wouldn’t there be an opportunity for electric vehicles? May be not cars for a start (still to expensive), but electric motorcycles would be affordable.
At least in Ethiopia this should be part of the economic agenda: with electricity costs of 0.03USD/kWh and a surplus of renewables power this would greatly counterbalance the expensive and hard-currency petrol/diesel imports. A first step in reducing the current account deficit of 11% in a county with a chronical USD-shortage.
Guest post by Eric Kaleja
Eric is DEG’s Vice President Energy & Infrastructure Africa/Latam