In too many countries, transmission and distribution remain the responsibility of badly managed state utilities. Gridworks CEO Simon Hodson explains to David Thomas how his organisation plans to invest to make the sector commercially sustainable
In the barren, rocky wasteland at the southern edge of Kenya’s remote Lake Turkana sit the whirring turbines of East Africa’s largest windfarm. Some 600 miles north of Nairobi, 365 windmills driven by the ceaseless gusts of the Turkana Wind Corridor supply the national grid with 310 MW of crucial renewable power.
Launched in 2019, the project is an encouraging sign that African nations are beginning to get to grips with the alarming scale of the continent’s power needs. Progress remains piecemeal – if African countries continue on their policy trajectories, 530m Africans will still lack electricity in 2030, according to the International Energy Agency. Bringing reliable electricity to all Africans requires annual investment of around $120bn, it argues.
But while impressive generation projects like Lake Turkana garner press plaudits, private sector attention, and government patronage, the less heralded work of improving transmission and distribution – the crucial networks by which power reaches the end consumer – often goes neglected.
From 1994 to 2018, private investment in African generation totalled some $19bn compared to just $3bn for transmission and distribution, according to the World Bank, which estimates that expanding the transmission network requires between $3.2bn and $4.3bn every year until 2040. In too many countries, transmission and distribution remain the responsibility of badly managed state utility companies who have neither the capital, expertise or political will to roll out systems capable of serving vast, dispersed populations.
Investing in transmission and distribution
In a bid to respond to the challenge, CDC, the UK’s development finance institution, has launched Gridworks, a development and investment platform principally targeting equity investments in transmission, distribution and off-grid electricity. Chief executive Simon Hodson says that the sector is only now getting the attention it deserves.
“You have a situation in many countries where you have an equilibrium or overcapacity of generation, and they can’t absorb the generation they’ve created. In many cases the generation is way in excess of the networks, and it’s because of decades of underinvestment. I think everyone’s known for decades that this is the real bottleneck, but it’s reached a tipping point, and it will get more and more severe in the coming years.”
Launched with an initial short- to medium-term ambition […]
