In February, Somalia’s regional state, Puntland, commissioned a €3 million hybrid power plant that aims to cut bills by 17 per cent.
What change can cheaper electricity bills and reliable supply bring to Somalia? Quite a lot. More homes will light up as the cost barrier drops, improving their welfare. Economic activity will pick up as investors make a beeline and people open welding shops, cyber cafes and electronics stores. These will all ultimately translate to bolder gross domestic product figures for the country.
Keen to reap this envisaged economic dividend, Somalia’s regional state, Puntland, through the National Electric Corporation of Somalia (NECSOM), in February this year commissioned a €3 million hybrid power plant that aims to cut bills by 17 per cent to about US$0.83.
The 3.5-megawatt project, which is made of solar panels, wind turbines and a back-up diesel generator, is expected to remove darkness in Garowe as 100,000 homes enjoy cheaper renewable energy.
This will see a cutback on use of expensive diesel in power generation by 2,000 litres a day or 730,000 litres annually, enabling the area to achieve lower bills.
Reliable supply bodes well for the town as it makes bold steps towards becoming a modern hub with a vibrant media and cultural centres. The World Bank partly uses night light intensity to measure economic activity, meaning with more homes lit up, the fortunes of the country are set to improve in the eyes of global development agencies.
This, combined with improved security, could help spruce up the tattered image of the country, drive a positive investor sentiment and direct much needed capital inflows to the economy, according to Eng Patrick Obath, a Nairobi-based energy consultant. “Power generation and consumption is a powerful indicator of activity in an economy,” he reckons.
Only a small fraction of Somali population is currently hooked to the national power grid.
Somalia has, however, now joined a growing list of countries that have turned to solar-wind hybrid projects whose electricity can be stored off-grid or injected to the national grid. It has abundant sunlight and steady wind speeds throughout the year, making these cheaper energy sources for the power-hungry economy.
But investment in the sector has been sluggish over the years as the Horn of Africa nation continues to grapple with high power bills, which rank among the most expensive in the region.
Energy sector experts say that investments in hybrid power projects might just be what the doctor ordered for Mogadishu in the quest to lift the fortunes of the country that is still smarting from a war past.
“The Somali government is best advised to strengthen its grid network, currently not that stable, and scale up similar hybrid power plants to other parts,” says Mr Obath. He adds that this would help wean homes off the use of kerosene for lighting and powering their cook stoves.
Electricity is a key plank in the country’s growth drive, as investors are often swayed by the cost and availability of the utility.
Currently, Somalia’s power bills stand at US$1 per unit (kilowatt hour) – which is five times more than what consumers in neighbouring Kenya pay for thermal power.
This is largely because Somalia relies heavily on expensive diesel generated electricity, with a narrow option for cheaper alternatives.
Mr Obath warns that the costlier utility costs risk crowding out investors and slowing down the growth pace of the economy, estimated at US$1.4 billion.
This could deny the government tax revenues as companies’ bottom-lines shrink, fuelling unemployment, especially among the youth who might fall prey to Al- Shabaab recruitment.
The power plant in Garowe was constructed by Elvi Energy, which is a subsidiary of France-based Electro Power Systems Group. The government awarded the company the rights to develop it.
The French firm was in charge of engineering, supply and installation of the energy plant. “We are proud to power the Somali people, reducing their electricity bills and carbon emissions at the same time,” said Paolo Morandi, the chairman of Elvi Energy.
The project is set to be widened with the installation of additional 450kW of wind energy that will result in storage of about a quarter of the energy needs of Garowe.
Wind and solar energy cannot, however, be totally relied on as they are prone to weather conditions, making it necessary to have back-up diesel generators that can easily be switched on and off when the need arises.
Mr Obath says that the relatively lower cost of tapping into solar and wind sources and the projects’ short turnaround time compared to other sources like coal should spur the government to race down that route.
Currently, Somalia’s installed power capacity stands at a paltry 85 megawatts, a position that analysts say cannot sustain growth and attract heavy manufacturers with humongous power needs.
“With Somalia’s manufacturing industry being at infant stage, officials cannot afford to turn a blind eye to energy and other factors like security, which need a turnaround to attract investors,” says Mr Obath.
The country has in pipeline a 10-year energy plan staggered up to 2025 to revamp the energy sector at a cost of US$803 million, or about half its gross domestic product (GDP). This signals a tectonic shift in its fortunes following decades of skirmishes that have torn down infrastructure and crippled activity.
The plan suggests that 7.4 per cent of the cash or US$60 million be used to introduce off-grid energy solutions like solar lamps and batteries in rural villages, partly inhabited by nomadic communities.
Most African nations are increasingly turning to hybrid power projects, largely made up of a mix of solar, wind and thermal sources, in efforts to connect majority of their off-grid populations to electricity.