In recent weeks, large swathes of Spain and Portugal were plunged into unexpected darkness as power blackouts disrupted daily lives and raised fresh concerns about energy resilience across Europe. While much of the attention has focused on grid vulnerabilities and climate-related pressures, few have acknowledged the quiet, yet critical role played by an unlikely ally – Morocco.
In a moment that went largely unnoticed, Morocco emerged as an unsung hero, stepping in to divert surplus energy to help stabilise the Iberian grid. This highlights the importance – and economic opportunity – presented by investments in transmission and distribution infrastructure and why the African continent needs to think beyond generation infrastructure.
While there has been a lot of focus on generation capacity and the introduction of clean energy solutions including solar and wind energy, transmission and distribution infrastructure will become an increasingly important part of the equation.
The World Bank estimates that in Sub-Saharan Africa, 24% of generated power goes un-used because of poor distribution and transmission networks. This is much higher than losses in other developing regions, such as South Asia (15%) or Latin America (17%) and the Caribbean (13%), where we are seeing a shift in distribution models that have traditionally been based on a centralised system managed by the government.
With generation projects in full swing, private sector operators are now wanting to ensure that the power they are generating is being consumed and that they are able to generate appropriate revenue. This becomes a challenge if almost a quarter of your product is not able to get to the consumer or end-user.
The challenge we have had with transmission and distribution infrastructure is that it is not seen as profitable – it has been more of a public good.
If we consider that we typically observe approximately 12,000 km of transmission and distribution infrastructure per gigawatt of power, and the fact that the African continent currently has about half of this, and that the continent’s grid infrastructure is aged and under-maintained, it becomes apparent that substantial investment is necessary. Estimates suggest that Africa would need between $50 billion and $60 billion in annual infrastructure investment to address this gap.
With more private sector players entering the market, this then creates a question around who will pay to maintain this infrastructure and ultimately, at what cost.
This is where governance will become a key discussion point as private and public sector stakeholders partner on projects. While there is a path forward on how public and private sector capital partner on generation infrastructure, we need to develop similarly clear models for transmission and distribution infrastructure projects. This will require coordinated action and leadership on several themes, including to: fast-track permitting, make grid planning institutions independent, accelerate regional market integration, and provide regulatory clarity on tariffs, access, and recovery.
While stakeholders may seem far apart today, it is worth remembering that the telecommunications sector successfully navigated this with the rollout of mobile networks. This could serve as inspiration for partnerships in the energy sector on grid infrastructure.
The benefits are clear. It is estimated that a 1% increase in energy access can increase Gross Domestic Product (GDP) by 0.7% – transmission and distribution infrastructure is a key part of that story. Through deliberate investment in grid infrastructure, countries can boost economic growth and create nearly 1 million jobs locally. In West Africa, this would contribute to tripling trade within the West African Power Pool (WAPP) by 2030.
East Africa could see power trade activity increase by up to 20 times by 2040. This level of growth would be game-changing for the continent, but we can only recognise this through deliberate investment to rapidly upgrade and expand the continent’s transmission and distribution infrastructure, as well as to build a robust ecosystem backed by strong governance and institutions.
Morocco coming to the rescue of Spain highlights that while the African continent has much work to do, the expansion of transmission and distribution networks will not only support domestic opportunities but will allow forward-thinking countries to explore alternative export opportunities.
By Adwoa Banful, Partner at Boston Consulting Group, Johannesburg