By Robert Franklin

It is estimated that an additional 20 000 MW of generation capacity entered operation in Africa from 2010 to 2015, 7 500 MW of which consisted of renewables. Over recent years, renewables’ share of projected capacity additions has been periodically adjusted upwards in countries’ energy master plans as the cost of technology declines and procurement processes become more efficient and competitive. Virtually every country on the continent, even fragile States, has a procurement programme at some stage of development or implementation that includes renewables.

For each dollar of investment in generation capacity, at least another 50% is required to rehabilitate and upgrade transmission and distribution infrastructure, the design of which is affected in various ways by the presence of renewables in the energy mix.

Procurement processes and institutions, as well as legal and regulatory frameworks, have evolved or have been adapted to reflect the characteristics of renewables technologies. Rural electrification programmes using renewables mini grids have changed the economic viability of providing access to rural populations.

US support and collaboration have been central to these developments at numerous levels, ranging from technical assistance, participation throughout the capital structure in private-sector projects, debt syndication, public-sector loans, supply chain credit facilities and the provision of risk mitigation products. This support and collaboration involves a network of bilateral institutions (such as the Overseas Private Invetsment Corporation, USAid and US Exim), multilateral institutions (such as the World Bank and the African Development Bank), strategic partnerships (such as the Climate Investment Funds facility), intermediaries (such as funds and regional institutions) and initiatives such as the African Renewable Energy Initiative, or AREI, Sustainable Energy for All, SE4All, and the USAid-led Power Africa initiative.

The election of Donald Trump as US President seems certain to result in a scaling back of US support for clean energy projects in Africa. He has declared climate change to be a hoax and indicated that the US will resile from the 2015 Paris agreement to limit global warming and the institutional network referred to above, through which the US participates, also offends certain other core positions, in particular the view that there is no direct connection between global development and the national interest, economic isolationism and the idea that institutions such as US Exim belong to a system of crony capitalism.

While a scaling back will have a major impact, it is difficult to predict its exact nature and extent. While some of the institutions through which the US acts in this domain are bilateral, many are multilateral, and it seems clear from the statements around UN Climate Change Convention (COP 22) conference that was held in Marrakech, Morocco, late last year that other countries and key stakeholders remain committed to the consensus view on climate change. Further, values that are objectionable to the new administration are embedded in the institutional DNA of many of the relevant organisations. It seems most likely, therefore, that they will continue with the existing policy direction but with reduced support from the US.

All this is happening at a time when the renewable-energy industry appears to have reached the point of being fully cost competitive with other technologies. In South Africa, for example, the cost per kilowatt hour of utility-scale solar generation in recent procurements has been below that of coal-fired generation, the cheapest thermal technology.

While renewables technologies impose specific demands on the energy mix, they also allow decentralised generation, which reduces the burden on grid infrastructure. The greatest threat for renewable-energy projects in Africa arises not in relation to the industry itself, which is becoming more regional, but from the scaling down of programmes and products – whether addressing capacity shortcomings in the public sector or market failure issues in the private sector – which are designed to bring about the conditions for accessing private finance and investment.

Assuming a US withdrawal of this kind, it will be important, even if there are compensating trends. It is possible that other countries will step up their commitments within the existing multilateral framework. Another possibility is that there will be a change in the institutional network, with new multilateral institutions representing different constituencies playing a significant role, such as the Brics Development Bank of Brazil, Russia, India, China and South Africa. An increase in bilateral support from other sources, particularly China, also seems likely.

Franklin is legal director at law firm Clyde & Co.