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Monica_55905 Apr 11

The Importance of Gas in Africa

The Importance of Gas in Africa  image
SUMMARY OF THE SESSION UNDER THE SAME TITLE THAT TOOK PLACE AT THE POWERING AFRICA SUMMIT (PAS), IN WASHINGTON DC, ON MARCH 2022. 
Though Africa has great gas parity, climate change has significantly impacted how developers approach the market. Developers cannot deny the many risks of the market as the future of gas utilization is uncertain. Developers must determine an earlier sunset date to meet COP26 and Paris Climate Accord conditions; predict the timeline of battery technology development; and prepare for a deadline of gas obsoletion. Since renewable energies are not developing as quickly climatologists would like, those in the gas industry must walk in synergy with COP26 conditions while remaining in business.
 
Many phenomenal renewable energy projects are not progressing as fast as they should because of revenue collection disparities and the inability to secure financers.
 
Countries succeed when their ecosystems operate cohesively and not just their generations. There must be coordination across the power ecosystem [government and financer] and among those who control the energy [the technologists] for there to be a success in maintaining renewable energy. These renewable energy systems depend on the collection from cash customers, so it is in the best interest of the government player to improve incentivization. Revenue collection disparities create failed systems. To avoid such failures, some countries create regional buy-in through power pools that are interconnected with power purchase agreements that ensure payment monthly outside of the cash customer. Off-setting the need to rely on the cash customer keeps regions from experiencing blackouts due to the failure to pay shut-offs.
 
The inability to secure financers comes from the lack of coordination among shareholders who create the full scope of the deal and the ineffectiveness to persuade financiers of renewable energies that require groundbreaking development. Development time in Africa is critical when it comes to the deal-making process. If African governments do not create policies that encourage the timed transition of gas to renewable energies, financers will continue to participate in the market for short-term profit returns or abandon plants after failed developments. 
 
While the phasing out of gas use is pertinent, we cannot ignore the benefits the resource serves in the short term. There is great demand for African gas and a need to extract raw materials for transport. Gas can be a cornerstone for industrialization; fertilizers, light manufacturing, blue hydrogen, and gas dual use pipelines.
 
Developers must develop gas fuel, put local generations near the population centers, keep the business within the nation whose soil it comes from, and utilize the side uses of gas. This is the importance of gas in Africa, to build economies, and this is how you best utilize the resource.

Continue the conversation at the upcoming Africa Energy Forum (aef), which will take place in Brussels, Belgium, from 21-24 June 2022. More information here