The global industrial economy is riddled with an energy crisis that appears to be getting worse. It’s only a matter of time before the supply of fossil fuels begins to dwindle, driving up prices and causing even more instability around the world. Thankfully, we are actively working to find solutions for this problem, and renewable power is one answer that has emerged.
Renewable energy refers to energy sources that can be re-used, and at the moment, there are two technologies that are garnering a lot of attention. The first is wind power, which uses rotating blades to collect kinetic energy from the wind. The second is solar power, which harnesses the radiant energy released by the sun. Both technologies have drawbacks and benefits that need to be considered, but in general, they provide sustainable solutions for our current dilemma.
However, as the world shifts toward renewable energy, there is a new challenge facing the manufacturing industry, which has been a cornerstone of economic growth for centuries. Factories have long provided jobs, fuelled innovation, and produced essential goods for consumers worldwide. But as we seek to reduce our environmental impact and transition to cleaner energy sources, manufacturers must find ways to stay competitive in a changing landscape. This means embracing renewable energy and finding new, more sustainable ways to operate.
The transition to renewable energy is well underway. Wind and solar power are now cheaper than coal in many parts of the world, and governments are increasingly committed to reducing greenhouse gas emissions. In this context, manufacturers must adapt or risk falling behind. One solution is to invest in renewable energy. Many companies are already doing this, installing solar panels or wind turbines in their factories and using the energy they produce to power their operations.
While the solar photovoltaic industry has grown at an astonishing rate, traditional manufacturers – like Siemens – have also entered the sector, because they are able to leverage their existing expertise and supply chain to enter this new market. For example, Siemens has developed a solar inverter that helps reduce installation costs by 30-40 percent while increasing efficiency. The company estimates it will invest €1billion over the next five years in renewable energy projects globally. This not only reduces their carbon footprint, but also insulates them from volatile energy prices and grid outages.
However, for many manufacturers, the upfront costs of renewable energy are prohibitive. Building a solar farm or wind turbine requires a significant investment, and the returns may not be seen for years. In addition, renewable energy systems require maintenance and repairs, which can be costly. Furthermore, long-term use of renewable energy systems lowers the value of fixed assets as they depreciate over time. Because of its tremendous growth potential in the coming decades, a growing number of manufacturers are now looking to deploy green energy systems that are more flexible and consume less in the long term. This often means deploying smaller renewable energy systems in remote locations or even in factories themselves.
Alternatively, governments and financial institutions can provide incentives and financing to make renewable energy more accessible to manufacturers as a way of addressing these challenges. For example, tax credits, grants, and low-interest loans can help offset the initial costs of installing solar panels or wind turbines. Similarly, public-private partnerships can bring together the expertise and resources needed to build large-scale renewable energy projects that serve multiple manufacturers.
In addition to investing in renewable energy, manufacturers can also improve their energy efficiency. By optimising their production processes, reducing waste, and using energy-efficient equipment, factories can significantly reduce their energy consumption and costs. For example, simple measures, like upgrading lighting systems or insulating buildings, can lead to substantial energy savings.
Manufacturers worldwide must innovate to stay competitive. As the world transitions from fossil fuels to renewable energy, they need to evolve their businesses and become leaders in this new industry. Manufacturers can also explore alternative forms of energy, such as hydrogen fuel cells or geothermal energy. While these technologies are still in their early stages, they offer promising possibilities for reducing carbon emissions and increasing energy resilience. Developing these technologies will be crucial because the transition to renewable energy is just beginning. By investing in solar and wind power, committing to long-term energy plans, and using renewable energy more effectively, manufacturers can help ensure that Africa’s industrial revolution is sustainable.
With the right mix of incentives and financing, many manufacturers can adapt to a green economy. By deploying renewable energy systems of all types, they can reduce their environmental impact while saving money and staying competitive. By improving energy efficiency, they can reduce their energy costs and potentially boost profits. By investing in more ‘green’ energy technologies, they can lower their carbon footprint and become more resilient to fluctuating energy prices.
Ultimately, the key to staying competitive in the age of renewable energy is to embrace innovation. Manufacturers must be willing to experiment with new technologies and processes and to collaborate with partners across industries and sectors. By doing so, they will not only reduce their environmental impact, but also improve their bottom line and drive sustainable growth.
Africa’s industrial green path faces an existential dilemma: how to advance their economic transformation and industrialisation while being responsive to required climate change action. In the current climate debate so far, however, there has been little talk of how to join up these efforts in a win-win way. Africa contributes the least to the climate crisis – in terms of cumulative greenhouse gas (GHG) emissions compared to other continents – but it needs the most economic development and support on job creation.
Aside from South Africa, wind energy in Africa has not been fully deployed on the continent; but with the right government policies in place, it could be a profitable option for Africa’s aspiring manufacturers. For example, Kenya is investing heavily in wind energy as a way of offsetting their dependency on fossil fuels. As Kenya posts impressive efficiency gains, investors are pouring in to take advantage of wind’s potential for export. Africa has the potential to be a major importer of renewable power, placing its best bets on wind power because of its rarity and future growth potential. In the long run, this should be a smart business decision because it allows African countries to take control of their energy resources. Investing in renewable power will allow Africa to reduce its dependence on foreign oil and gas, opening a world of export options for green technologies and manufacturers.
The continent’s best manufacturing companies have the opportunity to become global leaders in renewable energy use. Africa can be competitive when it comes to exporting wind power, but only if African businesses are willing to take on the challenge of using clean energy in their operations. This also means that African companies need to invest in research and development to provide the best possible solutions. Once these firms are employing wind-powered electricity and solar energy solutions, they will be primed for global success and will have the ability to compete with fossil fuel companies on a level playing field.
It is a good idea to look at the best renewable energy resources Africa’s natural resources can harness. Companies that decide to invest in wind and solar energy technology will eventually be able to take market share away from other international producers. These businesses will lead the world in the utilisation of renewable energy and have the ability to make money from the sale of their goods.
The case of special economic zones and clean energy
A new generation of African countries are investing in their environment, and the current trend of focused growth into ‘special economic zones’ is the latest step in fostering green change for the continent’s manufacturing. Ghana’s Dawa Industrial Zone is an example of a special economic zone that fosters a green future for manufacturing. This zone is strategically located near major transport routes in the country, making it an ideal spot for manufacturers to set up shop as it provides easy access to both local and international markets. Additionally, the zone is designed to be environmentally friendly, with a focus on reducing waste and using renewable energy sources.
In addition to a 132MVA sub-station, the Dawa Industrial Zone has an alternative solar plant with the potential for 800MWP (1200GWH) of solar power generation for the factories located within the zone. This reduces the carbon footprint of the businesses in the zone and insulates them from volatile energy prices and grid outages. The zone has also established a centralised waste management system, which reduces waste and improves environmental sustainability.
In order to ensure that businesses in the Dawa Industrial Zone conform to environmental regulations, the Government of Ghana has established an Environmental Protection Agency (EPA). This body is responsible for monitoring the environmental impact of factories in the zone and ensuring that they comply with relevant laws and regulations. This helps to ensure that the zone remains environmentally sustainable and attractive to investors who are interested in operating in a green business environment.
Africa doesn’t need to ride the oil boom surge or get caught up in the post-oil economy frenzy. Renewable power is a viable option for Africa to adopt, and it is just a matter of choice. In countries where governments have the political will to harness and produce wind and solar energy, electricity will become affordable for all within the country. This means that all African citizens can benefit from a cleaner energy source, bringing a positive turn to African manufacturing.
The writer is a financial advisory, trade and transformation consulting professional with almost two decades of enterprise leadership experience across EMEA
