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Power Infrastructure Tracker in East Africa

East Africa electricty market to grow


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2014-04-04 07:01:01 - Power Infrastructure Tracker in East Africa - a new market research report on companiesandmarkets.com

East Africa´s infrastructure development lags behind that of the Southern African region and that of the West African States. East Africa has the lowest access to electrical power and smallest per capita generation compared to all the other sub-regions on the African continent.
The demand for electricity in East Africa is expected to grow at 5.3% annually,.
Government has prioritised energy development and as a result, significant investment is being channelled towards the development of power infrastructure.
The potential for power infrastructure development creates substantial opportunities for investors globally; however, it is crucial to understand the unique opportunities and challenges of the East African region and the individual countries.
Most of the investment will have to come from private companies, multilateral loans and governments

 

 

in the regions. Energy and electricity has become a real business issue and not just a development agency issue.
There exists potential for intraregional energy and trade integrations and this will create opportunities to reduce costs and ensure greater reliability and sustainability of power supply throughout the region.
All East African countries would need to invest significantly in cross-border interconnections to expand the electricity trade.
If cross-border interconnectors develop and ensure more power flows more readily across the region, then they could position Ethiopia, Rwanda, Sudan, Uganda and Tanzania as net exporters of electricity, while Kenya and Burundi could operate as net importers.
The ability of these East African countries to deliver the necessary investments in hydro power is crucial to positioning them to supply to export markets and fast-tracking regional power trade.
The key drivers for power infrastructure development in East Africa include economic development and the increasing demand for electricity, large quantities of gas finds and the drive towards regional interconnection.
The restraints in development include the lack of investment and finance, limited private-sector participation, political instability and the lack of local skills, human capacity and industries.
It is expected that the energy mix in Kenya will diversify leading up to 2020, from 2012, where almost half of all the power generated is from hydro. This creates the opportunity for significant power infrastructure development.
However, Rwanda will continue to invest in hydro power due to the low cost of hydro power, the drive to increase installed capacity through the development of domestic energy resources and the available attractive Renewable Energy Feed in Tariff (REFIT) scheme. There is a growing domestic opportunity to engage in Rwanda´s power sector as the Energy, Water and Sanitation Authority (EWSA) has been making greater use of local contractors in new projects.
From a long-term perspective, Uganda has the potential to become an exporter in the East African power pool. Transmission lines are already in place, but the development of power generation infrastructure is still lacking.
It is expected that Uganda will offer the majority of its infrastructure projects to Chinese companies. Chinese companies´ offer to option to be paid from future oil revenue, which positions them as preferred companies. It is expected that oil production will start within the next years in Uganda.
Due to the increasing power demand and the consecutive years of droughts, Tanzania is facing significant challenges with regards to power shortages. The government of Tanzania and the Tanzania Electric Supply Company (TANESCO) continue to drive the installation and procurement of new power plants.
The large gas finds in East Africa mapped the region into a major participant in the world gas market and it is attracting large international participants. Gas development plans, financing for infrastructure and partnership with international companies will be critical for successful development of this sector.
It is important to note that, even though there are ambitious development plans for power infrastructure in place, in reality, the development of and investment into these projects are slow and not guaranteed.
 
 
 
 
 
 
 
 

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