The 2015 African Progress report has revealed that African households can save up to US$8billion if governments take steps to reduce the cost of energy.
“Just halving costs would save US$5billion for people living below US$2.50, which translates into US$36 per household. Plausible price reductions of 80 percent would raise these figures to US$8 billion overall, US$58 per household,” states the African Progress report.
In sub-Saharan Africa, it is reported that 692 million people live on less than US$2.50 a day — 60 percent of them on less than US$1.25 a day.
Assuming an average of five people per household (138 million households) and an average monthly household expenditure on energy of US$6, an annual amount of US$10billion will be spent on energy.
According to the report the market does not serve the poor well, as Africa’s poorest households are spending around US$10/kWh on lighting, or around 20 times the amount spent by high-income households with a connection to the grid.
“By comparison, the national average cost for electricity per kilowatt-hour in the United States is US$0.12. A rural woman in northern Nigeria spends around 60 to 80 times more per unit of energy consumed than a resident of Manhattan or London. The same woman also spends some 30 times more than the residents of high-income households with grid connections in gated communities in Lagos,” states the report.
The report further recommends that flexible renewable technologies, especially solar photovoltaic (PV) cells, have the potential to deliver energy at lower unit costs than those now paid by poor households.
However, the major challenge is that poor households are unable to afford the upfront capital costs of the technologies that could lower prices and generate savings over the long run.
Another challenge why Africa has been unable to take advantage of the renewable energy is the constraint faced by firms in securing credit and equity for investments geared toward markets characterised by limited purchasing power.
The case of Ghana has not been an exception, as the country has over the years heavily relied on hydro-energy without taking advantage of other alternative sources of energy.
This has culminated in the country having to shed about 600 megawatts of power daily, resulting in great loss to both industry and households.
Some energy experts also share the opinion that solar is the way forward for Ghana to tackle its current erratic power supply.
Maxmillian Kwarteng, CEO of Gramax Energy Group and an Environmental and Energy Manager, said studies have revealed that the cost of solar will only get cheaper in the near future, which is in stark contrast to the steadily increasing price of electricity produced from fossil resources.
“In central and southern Europe, for example, the cost of solar will have dropped to US$0.04 to US$.06 per kWh by 2025. By 2050, solar will cost just US $.02 to US$0.04 cents (15 pesewas) per kWh, at which point it will become the cheapest source of electricity available in sunnier parts of the world.
“Solar power remains the fastest-growing energy technology, with the world’s installed photovoltaic (PV) capacity doubling every two years according to Greentech Media. If growth continues at that rate, solar panels will supply the entire planet’s electricity needs within the next 10 years,” he said.