Dec. 6, 2011 - ANDREA CHIPMAN - online.wsj.com

On the face of it, the idea of Africa providing a model of sustainable energy development to the world seems an unlikely one. Eighty percent of the world's 1.5 billion people living without electricity live in Sub-Saharan Africa, according to the African Development Bank. The continent's scarcity of grid links would seem to be an intractable obstacle to Africa's goals of improving development and alleviating poverty. Yet, Africa possesses significant solar, wind, geothermal and hydropower resources that have only barely been tapped, and which give the continent the potential to offer different models of sustainability

African countries have a huge opportunity to turn their energy infrastructure deficits into an advantage, both for the continent itself and potentially for the rest of the world. Renewable technologies that use wind and solar are the gateway to this opportunity, but much work still needs to be done. Africa is in many ways a blank canvas for renewables.

The lack of comprehensive grid connections means most Africans currently get their power from diesel generators at prices of around $1 per kilowatt-hour, compared with less than 20 cents per kwh for solar photovoltaic power, according to David Nickols, managing director of WSP Future Energy, a unit of London-based technical consultancy WSP Group.

"Because renewables [in Africa] are compared against decentralized diesel generators off-grid, the financials for renewables may well look attractive," he says.

At the same time, the huge potential offered by larger-scale projects will require new cross-border collaboration between African governments, multilateral institutions and industry that could, if successful, be a model for other regions of the world.

To be sure, both large and small renewable projects face many of the same obstacles in Africa: A lack of secure property rights; the absence of a comprehensive regulatory framework in most African countries; and pressure on governments to make their electricity self-sustaining, with prices charged matching the costs of generation. "The best thing the world could do for Africa is to set up a support system for the utilities," says Jeremy Connick, a partner with U.K. law firm Clifford Chance.

"If we simply say we aren't going to allow governments to give guarantees in respect of the payment obligations of these utilities until systems are reformed, countries don't develop, or use fossil-fuel-powered generators."

Meanwhile, markets continue to discount the risks associated with fossil fuels, assuming they are lower than those associated with alternative energy.

"In terms of pure political and economic power, conditions still favor investment in fossil-fuel-based technologies and businesses," says James Cameron, a founder and vice chairman of Climate Change Capital in London.

Improved legal and tariff structures could dramatically improve the climate for sustainable energy investments, but a focus on micro as well as macro projects is also key.

The Wall Street Journal Europe has investigated five approaches to sustainable energy in Africa, ranging from wind and solar energy programs, to hydropower. As well as a proposal to allow individual citizens to profit from their own sustainable behavior.

Harnessing Wind
Wind is in plentiful supply across Africa, with significant projects under development from Kenya to Cape Verde and

from Morocco, a former leader in wind projects, to South Africa, which earlier this summer rolled out a tender for renewable power projects that included up to 1.85 gigawatts of installed wind generation set to be delivered by 2030.

In East Africa, Kenya is developing the Lake Turkana wind farm, which is expected to produce 300 megawatts of new capacity by July 2012. Similarly, off the continent's windy west coast, Cape Verde's government has signed agreements for a more modest 28 megawatt wind farm, although the more consistent wind conditions on the island chain means the ratio of actual to potential output is 60% for the Cape Verde wind farms, compared with 34% in the U.K., according to Mr. Connick.

Wind energy has the advantage of being an effective source of power in small and large projects. For the medium-term, however, financial considerations could make it a second choice alternative energy source, according to Mr. Nickols, who notes that with Africa needing to import most goods for power generation, the towers for supporting wind turbines work out as substantially more expensive than solar panels, which are cheaper and easier to ship.

Solar Future
Virtually uninterrupted sunshine is one commodity Africa has in abundance. Now, a number of projects based in the Sahara Desert are trying to use this resource to the continent's advantage.

The biggest of these, the €400 billion ($550 billion) 12-member German-led Desertec Industrial Initiative consortium, is looking to fund a series of individual solar projects with the aim of supplying as much as 17% of Europe's energy demand by 2050.

Getty Images German Chancellor Angela Merkel [above] is lending her support to a German-led project that aims to use the deserts of North Africa to provide electricity to Europe

The project has strong backing from leaders across Europe, with German Chancellor Angela Merkel leading the charge. In a message to the second Desertec conference in Cairo in November, Ms. Merkel praised the cooperation between Europe and North Africa and stressed the importance of diversifying energy transmission away from traditional sources.

Desertec works by concentrating energy from solar-thermal power plants in deserts and then using heat storage tanks to deliver power on demand, thereby compensating for the fluctuations of photovoltaic power and helping to stabilize the grid.

The consortium already has two plants in operation in Morocco and Egypt. Morocco hopes to upgrade its existing transmission line to Spain and install 2000 megawatts of solar power capacity to supply both its own needs and to tap into the lucrative European export market.

For solar, like wind, the main challenge to overcome is the absence of a coordinated regulatory and legal framework, such as guaranteed feed-in tariffs, power purchase agreements or investment guarantees to underpin investment in the technologies. Desertec seeks to create a single legal framework that can be adopted by many different countries.

Ultimately, solar backers say, costs are likely to decrease rapidly as more power plants are built and technological progress continues, allowing Saharan-powered solar energy to be as competitive as fossil fuels in less than 10 years.

Water Works
Hydropower is a large-scale solution to creating sustainable energy. Tapping into Africa's vast river systems opens up a world of energy possibilities.

The Grand Inga Dam project, which plans to harness the enormous potential of the Inga Falls on the Congo River in the Democratic Republic of Congo, is perhaps the most high-profile example.

The project could produce as much as 39,000 megawatts of electricity, according to the London-based World Energy Council, more than one-third of the continent's current electricity output. Two other small power plants have already been built on the site and a third is currently in the design phase. In addition to exporting energy to southern Africa, the project, which is expected to cost as much as $70 billion, could transmit energy as far as Egypt and Nigeria, and potentially to Europe via high-voltage lines.

Political instability will make security an overriding challenge. Yet a clear and coordinated legal framework and strategy for refurbishing transmission lines to export Grand Inga's power are the main preconditions for the project to gain sufficient financial backing. Grand Inga has huge potential but will need strong leadership to achieve it, according to Boris Martor, head of the African group for U.K. law firm Eversheds, which has advised DRC state-owned utility SNEL, since 2001.

"Right now, there's no coordination to get it off the ground. There needs to be a leading company or multilateral organization," he says, adding that the project is likely to remain on hold at least until 2012.

Incentives
The pinnacle of sustainable development

is a system that rewards changes of behavior on an individual level and at the same time allows families to raise themselves out of poverty.

This is easier said than done, particularly in Africa where few individuals have bank accounts and most people still eke out a subsistence living far from the reach of established financial institutions.

San Diego businessman David Palella, however, thinks he has found a way to overcome these difficulties. His not-for-profit organization, Carbon Manna Unlimited, has developed a system of direct micro-payments to rural people who offset their carbon production through the use of high-efficiency stoves.

The project aims to establish cell-phone based carbon micro-credit systems, using a simple message service to allow families to monetize the carbon offsets they produce. Its key advantage is that it's based on existing infrastructure. While few rural Africans have landlines, mobile telephone ownership is rapidly increasing, and companies such as Kenyan telecom provider, Safaricom, have already introduced systems that allow subscribers to transfer money via cell-phones.

"Africa has the most advanced cell-phone-based payment systems using simple text," Mr. Palella says. "You can establish a sustainable carbon reduction project almost anywhere in Africa and share the money through these systems."

Mr. Palella acknowledges that most voluntary emissions reduction trading systems require those that benefit from them to go through a series of time consuming steps, as well as wade through the necessary paperwork. This can be difficult to prepare and costly, especially when it is contracted out to carbon project consultants. Still, he notes that the voluntary emissions reduction market in Europe is worth over $50 billion a year, and that Carbon Manna is a sustainable, open-source, micro-profit-sharing system in which the paperwork can be standardized and streamlined.

Realizing a first demonstration project has been tricky for Mr. Palella. A Kenyan offshoot strayed from the guidelines of the original concept, he says, while an Ethiopian project is looking to build its system on the structure of an existing charity for poor farmers.

However, some industry experts say the expiration of the Kyoto treaty in 2012, by disbanding the separate United Nations emissions trading framework, could potentially create more impetus for innovative approaches such as Mr. Palella's Carbon Manna.

Geothermal
In a continent with little electrification, East Africa is particularly vulnerable, lacking the fossil fuels and natural resources of much of the western half of the continent.

Yet the United Nations Environment Program believes geothermal power sources, extending across the Rift Valley from Ethiopia to Mozambique, could support the region's power needs. Research by the U.S. Geothermal Energy Association backs this ambition up. It estimates there to be as much as seven gigawatts of geothermal potential in the region.

The African Rift Geothermal Development Facility was launched in 2010 to promote its use. The project includes a regional networking system and technical assistance program, supported by UNEP, as well as a risk mitigation fund backed by the World Bank.

Kenya established the Olkaria fields, Africa's first geothermal project, nearly two decades ago and continues to be the only country in the region actively exploiting geothermal resources.

Geothermal energy is expected to account for nearly 40% of Kenya's total power needs by 2012, with estimated potential capacity of 7,000 megawatts, according to UNEP.

Mr. Connick believes that the unique nature of the technology and absence of significant competition in the development of geothermal projects means that geothermal power is likely to be a later stage alternative form of energy

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