4. Energy transition enablers

The prerequisites for the transformation of the African energy sector are largely in place. Crucial factors, in addition to know-how and technology, are the political and regulatory environment. Technology solutions are abundant, cost-competitive with fossil fuels, and are ready to be deployed. The necessary elements, such as stable energy systems, reliable regulatory and financial policy frameworks, ambitious policy goals and appropriate markets (including regional ones), however, need to be realised by addressing barriers to renewable energy development outlined above.

Building on the structural barriers identified above, the figure below presents seven energy transition enablers that should be available if African countries are to make universally accessible and resilient, modern, decarbonised power sectors a reality by 2050.

Figure 2: Energy transition enablers and the barriers (universal and sectoral)

Cost-reflective tariffs and financially sustainable service providers: Below, cost-reflective electricity tariffs reduce incentives and finance to connect new consumers, drive underinvestment in generation and the grid and increase off-taker risk for private electricity generators. - High risk makes raising financing for renewable energy projects difficult and costly - Existing hydropower operates at reduced capacity due to a lack of maintenance and reinvestments

An environment conducive to private sector investments in renewables: RE developers in Africa face structural barriers and risks that make it difficult, costly and in some cases, impossible to raise the required debt and equity to scale up investments in renewable energy across Africa. - High risk makes raising financing for renewable energy projects difficult and costly - Regulatory and legal frameworks for private sector investments are lacking

Technologies and structures for energy efficiency and system flexibility: Integrating variable RE requires power system flexibility combining enabling technologies, market design, system operation and business models Strong policy and regulatory frameworks, competent institutions and liberalisation: Weak policy and regulatory frameworks, insufficient short- and long-term power system planning, a lack of transparency in terms of decision-making, insufficient regional integration and policy consistency across countries and shortfalls in institutional capacity are key structural barriers to energy transition in many African countries. Targeted technical support and capacity building. Liberalisation of electricity sectors through unbundling utilities to allow for private sector participation in electricity generation are viable solutions Affordable access and innovative business models: High upfront cost of individual connections often prevents potential consumers from getting access, despite living in proximity to the grid. Innovative business models and targeted efforts to reduce consumers’ upfront costs or provide payment plans are an important Robust grids coupled with competence in operations and maintenance: Poor technical state of many African electricity grids and the lack of preventive maintenance results in high T&D losses. Investments in transmission and distribution, including interconnectors for regional electricity trade, are indispensable enablers in achieving universal access and realising renewable energy’s potential.

Decommissioning fossil fuel generation capacity: Fossil fuel plants currently under construction will have economic lifetimes well beyond 2050. Avoiding investing in any additional fossil fuel-based generation assets and phasing out existing ones, possibly with international support, is crucial - Integrating a large amount of variable renewable energy is challenging in the absence of power system flexibility

- High risk makes raising financing for renewable energy projects difficult and costly - Regulatory and legal frameworks for private sector investments are lacking - Electricity is wasted due to high T&D losses and energy inefficiencies

- Integrating large amounts of renewable energy is challenging in the absence of power system flexibility - Electricity is wasted due to high T&D losses and energy inefficiencies - Existing hydropower operates at reduced capacity due to a lack of maintenance and reinvestments - Fossil fuel plants currently under construction will have economic lifetimes beyond 2050 - Economic incentives for utilities to connect new customers are limited - Raising financing for grid expansion and electrification is challenging - Electricity supply is often unreliable - Raising financing for grid expansion and electrification is challenging - Off-and mini-grid options are often not economically sustainable - Electricity supply is often unreliable - Electricity supply is often unreliable

- Relevant authorities have limited capacity for electrification

Raising financing for grid expansion and electrification is challenging High connection costs prevent customers from connecting

- Raising financing for grid expansion and electrification is challenging - High connection costs prevent customers from connecting

- Electricity supply is often unreliable