Johannesburg, South Africa and Hamburg, Germany — (METERING.COM) — March 26, 2013 – Renewable energy feed-in tariffs (REFiTs) can play an important role in transforming Africa’s energy sector by attracting investment in sustainable, renewable electricity production, according to a new publication from the World Future Council, the Heinrich Böll Stiftung and Friends of the Earth England, Wales & Northern Ireland.
The study, Powering Africa through feed-in tariffs, notes that the African continent has significant untapped renewable energy potential. Several African countries have already introduced a REFiT policy, including Algeria, Botswana, Egypt, Ethiopia, Ghana, Kenya, Mauritius, Namibia, Nigeria, Rwanda, South Africa (which abandoned its REFiT in favor of a bidding process), Tanzania, and Uganda.
Each has different motivations for the policy. For example, Mauritius is a small-island state dependent on fuel imports and South Africa is the continent’s biggest carbon polluter and facing international pressure to reduce its emissions, while Tanzania has less than 3 percent rural electrification but Algeria and Egypt have almost universal access to electricity.
The study clearly shows that, when tailored to local conditions, REFiT policies successfully increase the overall energy production of areas both on and off the electricity grid. Moreover, the decentralized nature of REFiTs provides the opportunity to empower communities and to revitalize local democracy and self-governance by allowing for alternative models of ownership and governance.
“Several African countries have already opened up their electricity market to independent renewable energy power producers,” commented Ansgar Kiene, director of the WFC Africa Office. “However, these countries have even more potential for local economic development if their policies are amended, by including a more streamlined and transparent administrative process and a lower entry threshold.”
The study states that overall costs of project development and the lack of affordable financing options have been identified as major constraints to project implementation across all countries.
Governments and state-owned utilities can easily help lower the costs for project development by providing detailed information on the country’s renewable energy potential. Further, streamlining the licensing process and standardized contracts should be considered to lower transaction costs. Credible guarantees for the power purchasing agreements raise confidence of banking institutions and can facilitate longer-term loans at affordable interest rates.
The study also recommends other national and international measures to shift financial resources towards renewable energy uptake. These include levies on fossil fuels and contributions from the United Nation’s Green Climate Fund.
As of 2012, 65 countries have implemented some form of a REFiT, driving 64 percent of global wind installations and 87 percent of the photovoltaic capacity that has been installed worldwide.