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African Power Sector Outlook Optimistic: PwC

Power utility companies and stakeholders across Africa anticipate a brighter and different outlook for the sector in the decade ahead, according to a new report from PwC.

Fifty one senior power and utility sector executives from 15 African countries took part in PwC’s Africa power & utilities survey. They report continued concern about some of the immediate risks to the power system, but are also optimistic about the longer term prospects for electricity in Africa.

Two thirds (67%) of those we interviewed cited aging or badly maintained infrastructure as a high or very high concern. Encouragingly, many felt this situation would improve, with only 39 per cent predicting that it would be a similarly high or very high concern in five years’ time.

And looking ahead to 2025, they anticipate definite step changes in a number of key issues:
•An overwhelming majority (96%) say there is a medium or high probability that load shedding will be the exception rather than the norm by 2025.
•Indeed, nearly three quarters (72%) are confident enough to rate that scenario as a high probability.
•94% say there is a medium or high probability that, by 2025, the challenge of finding a market design that can balance investment, affordability and access issues will have been largely solved.
•70% expect cross border electricity flows to be significant by 2025, accounting for a third or more of electricity generated.
Angeli Hoekstra, Africa Power & Utility Leader, PwC, said: “There is much to be optimistic about and the results point the way to improvements ahead. But security of electricity supply and cost reflective tariffs continue to be the number one challenges. Until they are resolved, power systems will remain stretched, as investments in the power sector will be limited. Addressing cost reflective tariffs while ensuring social equity is a key challenge.”

The survey also highlights the energy transformation that is taking place, as the market vision for the future will be a mixture of large scale centralised generation and local mini grid and offgrid distributed generation according to the fast majority of survey participants
•This is supported by that seventy per cent of the survey respondents believe there is a medium to high probability that advances and cost reductions in green renewable off-grid technology will deliver an exponential increase in rural electrification levels by 2025.
•And there is consensus that power companies will need to change their business models to respond to energy transformation. Eighty eight percent expect that future power utility business models will be transformed by 2030 with a quarter of them saying they will be unrecognisable from those operating today.

Hoekstra commented further: “Technological and regulatory change and new investments presents very exciting opportunities to increase
electrification access and electricity supply. New businesses and business models will be created and Africa will leapfrog into a better and more sustainable energy future if all stakeholders in the sector, from customers to governments, new businesses, regulators and utilities will embrace the opportunity”.

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