According to a recent report by auditing firm Deloitte, sub-Saharan Africa’s power sector is quickly becoming attractive to new entrants as business models change and solutions like smart grids are harnessed to plug supply gaps.
The ‘sub-Saharan Africa Power Trends’ report says challenges facing the power sector in many African countries “such as inadequate generation capacity, poor transmission infrastructure, unskilled or low numbers in the skilled workforce, poor maintenance of existing power stations, as well as poor metering and billing systems” will lead to innovations such as ‘smart grids’ to improves the sector.
“These challenges, coupled with a changing landscape in terms of technologies and the costs thereof, are giving rise to a number of ‘disruptors’ in the sector,” said Shamal Sivasanker, Africa Infrastructure & Power leader at Deloitte.
Smart grids that use digital communications technology to analyze, detect and react to local electricity demand changes are already being used in some African power utilities, including in countries such as Kenya, Nigeria and South Africa.
The report notes that state-dominant players are no longer the only players, and smaller players including those producing renewable energy such as wind, solar and biogas, are increasingly joining the national grids.
“If participants in the industry do not react in a market that is fast-evolving they run the risk of being left behind as consumer patterns change,” says Andrew Lane, Africa Energy & Resources Leader at Deloitte.
These changes have now created opportunities for new entrepreneurs to invest in the energy sector that has for long been dominated by governments.
Sivasanker says new players in the sector are coming in with a changed approach that seek to indentify solutions, take on strategic partners and use better business models that can navigate these challenges and open up new markets.
“Opportunities for firms exist to work with existing utilities in designing and implementing optimization strategies for both local generation and distribution as well as in the various power pools within the region,” says Sivasanker.