Renewable energies: How do governments in Africa help?

Renewable energies are energies collected from renewable sources, which are often naturally replenished on a human timescale, such as sunlight, wind, rain etc. [1]. Although it is widely asserted that renewable energies contribute to energy efficiency [2][3][4], future rapid deployment of technological diversification of energy sources would have a significant result in energy security as well as reducing environmental pollution caused by burning fossil fuels. Apart from renewable energies contribution to energy efficiency, renewable energy sources are capable of supplying humanity energy for almost 1billion years, at which point the predicted increase in heat from the sun is expected to make the surface of the earth too hot for liquid water to exist [5][6].

Irrespective of the numerous accolades that renewable energies attract, researchers have until now not been able to ascertain the direction of causality that exist between renewable energy consumption or production on the economy. Several papers argue that there exist a unidirectional causality [7][8], others argue that there exist a bidirectional causality [9][10], some also argue that there is absolutely no causal link between these two variables [7][11]. Despite varied results from researchers, most developed economies have intensified investments into the renewable energy sector [12]. In most economies, policymakers are still trying to encourage investments into renewable sources aimed at achieving United Nations proposed Sustainable Development Goals on affordable and clean energy [13]. Encouraging investments is somehow a good notion by most economies in the continent of Africa but as far as Africa’s energy sector is concern, most governments in Africa have important and peculiar roles to play in developing renewable energies for emissions-free environment. Here, we come out with some key policy measures that most African governments can help to contribute to the renewable energy sector.

  1. Grants/tax breaks for research and development & facilities

Governments in Africa should adopt a research and development plan that is capable of contributing to increasing the commercial deployment of renewable energies [14]. As renewable energy projects are generally long-term investments with generation incentives and depreciation schedules carried out over several years, grants and tax credits for research and development is likely to decrease both the total project cost and reduce the simple payback period. Also, grants should be provided to several research institute researching into Africa’s renewable energy markets and the potential benefits gained in ensuring balance markets.

  1. Instituting feed-in tariffs (FIT) per output produced

Instituting FIT amongst African governments helps accelerate investments in renewable energy technologies. In accelerating investments, governments should issue long-term contracts to renewable energy producers typically based on the cost of generation of each technology [15][16][17].  Rather than adopting an equal amount of energy for all users, generated technologies from wind, solar PV etc. should be awarded a lower per-kWh price. Under the FIT, eligible renewable energies generate a cost-based price for all the renewable energies supplied to the grid. This may help the development of diverse technologies thereby providing investors reasonable returns on their investments.

  1. Creation of tradable green certificates for output

In the field of electricity, governments should start creating tradeable green certificates to stimulate the penetration of green electricity [18][19]. With this policy, producers receive a certificate for  each pre-defined unit of electricity produced from renewable energy sources that is put on the grid. Retailers of electricity are allotted with targets for the consumption or sale of electricity from renewable sources . In order to show that they meet their targets, these retailers have to hand over certificates at a given point in time. Penalties are set if they are not able to fulfil their obligations. Therefore, retailers have an incentive to buy certificates from the producers and the certificates become valuable. Competition between producers and increasing supply of green certificates may lead to a decline in the price of electricity from renewable sources. In this respect, the green certificate system is considered as a cost-effective way to meet the renewable energy target.

  1. Urgency of externalities

Governments across Africa can solely invest in renewable energies because energy prices do not capture environmental and social costs and benefits. Fossil fuels are being unfairly favored despite negative external impacts, and renewable options need a leg up to realize the social benefits that they could bring. Private investors are unable to gain the full social benefits of investment in renewable technology, so governments need to step in to fill this gap. As climate change becomes a greater problem, this reason may take center stage. Therefore, governments can impact their investment through changing the allocation of costs and revenues from investment; altering the allocation of risk; or guiding the business and technology choices of investors.

See Also:  Summary Findings between Electricity Consumption and Ghana’s Economic Growth (GDP): Using Time Series Data from 1980-2016

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Bismark Ameyaw

BISMARK AMEYAW is a researcher at University of Electronic Science and Technology of China and a referee to a number of prestigious peer-review journals. He specializes in modelling and forecasting the dynamic links in energy policies and the economy. He writes, teaches and consults on management and econometric issues. He serves as an editorial board member and a reviewer for a number of prestigious international journals. You may contact him through: E-mail: 201714110101@std.uestc.edu.cn; kofiameyaw9@hotmail.com; 3101153683@qq.com

 

AMOS OPPONG is a researcher at University of Electronic Science and Technology of China and a referee to a number of prestigious peer-review journals. He specializes in modelling and forecasting the dynamic links in environmental, energy and the economy and policy analysis. He has rich research experience in diverse fields assisting research projects on mining, agriculture, sectoral energy demand, economy-wide energy demand and supply, trade, environmental cooperation, air pollution and climate change. You may contact him through: Email: 201714110129@std.uestc.edu.cn; oamos@rglobal.org

 

References

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  2. Zhang, S.; Andrews-Speed, P.; Zhao, X.; He, Y. Interactions between renewable energy policy and renewable energy industrial policy: A critical analysis of china’s policy approach to renewable energies. Energy Policy 2013, doi:10.1016/j.enpol.2013.07.063.
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  4. Castellani, B.; Gambelli, A.; Morini, E.; Nastasi, B.; Presciutti, A.; Filipponi, M.; Nicolini, A.; Rossi, F. Experimental Investigation on CO2 Methanation Process for Solar Energy Storage Compared to CO2-Based Methanol Synthesis. Energies 2017, doi:10.3390/en10070855.
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