Market for Renewable Energy for Electrification of Guinea Bissau: An Overview of Development

By Ashvin Ramasamy

Electrification Statistics: Summary

● 17 percent of the total population of Guinea Bissau has access to the power grid
● Target for electrification: 80% by 2030, with population projected at 2.45 million
● Electricity demand forecasted for 2030: population growth will drive a need for at least 279 kWh/year on a per capita basis (versus 16.78 kWh/year in 2012)
● Serious concern exists between the household income level and the ability to pay for the elevated cost of electricity in 2030

○ Families typically pay an estimated 10,200 FCFA/month for electricity, which accounts for 16% of average family income of 64,753 FCFA/month in 2011
○ Due to consumption and demand increases, electricity bills will likely jump manifold: projections point to 20,000 FCFA/month — on a subsidized tariff — or 40,000 FCFA/month without subsidy

● Policy target to boost clean stove use to 35% by 2030

○ Urban and peri-urban areas have a staggering 2% of the population using clean stove as of 2010: (or 31, 644 people)
○ Large market for improved stoves (i.e., operating with clean energies), especially in urban and peri-urban areas

Market Opportunities

The private sector and foreign investment hold the golden key to the proliferation of renewables in Guinea Bissau. Currently, technology required to make “clean electricity” is actually imported. As a matter of fact, all business aspects of the renewable energy industry rely on imported equipment: consumptive (i.e., end user systems), productive (i.e., the parts and processes required to generate electricity) and distributive (i.e., the the lines to transmit power to communities). Two of the big exporters by way of ground transport are Senegal and Gambia. However, when accounting for all modes of transport of all imports for renewable energies, a different picture emerges. From 2012 to 2016, France and India delivered the bulk of equipment — such as cables, transformers, and controllers, among other parts.

Statistics show growing appetite of renewables. In the 2015 to 2016 cycle, electrical machinery accounted for about 7 percent of the total country imports, a notable increase aligning with the growth of total imports (which increased by 21 percent over the same period). More encouraging from an investment standpoint is the 16 percent drop of mineral fuels (e.g., petroleum, natural gas and coal), as well reaffirmed policy directives to curb use of polluting energies. On the export side, market factors and decisive policy action have supported more renewables. While equipment intended for some process of renewable energy grew by a marginal 1% from 2012 and 2016, in the same period the country cut its mineral fuel exports by one fifth.

Funding Streams

Developing large scale renewable energy initiatives for satisfying energy security and electrification needs cannot succeed without the financial support of bilateral and multilateral institutions as well as development banks like the African Development Bank, the West African Development Bank and the World Bank. Traditionally, Guinea Bissau has secured loans and grants from these institutions to where little to no private funding came through. Moving forward, the model will hold sway in this sectoral development but private funding interest is expected to gain a larger share in the years to come.

In addition to the monetary flows originating from those institutions, technical expertise and regional integration processes greatly support the ambitions of Guinea Bissau — and assure the continuity of objectives to project completion. For example, bilateral institutions issue funds for hiring experts to perform assessments and evaluations in conjunction with government facilitation. Multilateral organizations make hefty grants available, like the Global Environmental Facility (GEF) and United Nations Industrial Development Organization (UNIDO) partnership to leverage the UNIDO broad-based knowledge of renewable energy, namely supporting the power distribution infrastructure through small and midsize renewable energy project development. In the same framework, the African Sustainability Centre (ASCENT) developed a project for a GEF-led programme for the development of PV technology systems for decentralized rural electrification needs as well as implementing use of improved kilns and cook stoves using energy efficient biomass for cooking. The entirety of this GEF-6 project will span 60 months and executes activities in the areas of Tchetche, Duta Djara, Lamane and Jemberém areas. The expected outcomes include 4 pilot mini-grid sites exploited through up to 4 public-private partnerships capable of generating 2 MW of pure renewable energy power, as well as the distribution of 5,000 improved cook stoves and 50 improved kilns. The power generated will supply household, communitarian, business and water pumping needs.

Opportunities & Roadblocks Beyond 2020

The onus to protect free market mechanisms is on the government to determine the best course of action. Photovoltaic systems boast more reliability than alternatives in closing the frequency and length of power blackouts experienced in Guinea Bissau today. With the abundant amount of constant insolation available in the country, this validates the long term exploitation ambition of solar resources. Likewise, demand is expected to grow and so will competition, bringing more value to the technology and eventually price cuts. Under near ideal economic conditions that would be the expected outcome; however, informal economic activities will more than likely play spoiler in formal commerce of solar energy. The black market has to be managed separately under government agency as it wields large potential to restrain market efficiencies, investment incentives and reduce revenues either directly and/or indirectly in the renewable energy industry.

One of the biggest roadblock for mainstreaming energy efficiency across the country is the lack of knowledge. Companies do not have knowledge of important laws and regulations that frame the energy and electricity sectors. Again, the indirect effect trickles down to foregone foreign investment — uncertain investment options translate into high risk and limited return in the mind of the investor..

Data guides informed decision-making, especially in the local context where renewables has not graduated from the embryonic stage. More so, good data substantiates market forecasts and enables better risk management. The issue in Guinea Bissau lies in the lack of reliable and recent data points on energy mix. As of late 2018/early 2019, data on power plants, off grid and on-grid systems as well as the mix of energy sources were still limited (see West African Power Pool (WAPP) GIS database, for evidence). Also, data on the use of renewable energy in end uses (e.g., transport, heat, electricity, manufacturing, resource extraction, etc…) is currently very sparse (See The Energy Progress Report, SDG 7). One symptom of the data shortage is that the national public utility does hold 100 percent coverage of the country. As far as the company is concerned, it is not obligated to collect and analyse data on excluded areas. Clearly, an overhaul in the statistical framework is needed to shed light on actual development in this entire decade.

On a technical level, by 2030 the popularity of mini off-grid systems will have expanded, with least 80 percent of renewable energy sources powering those systems — based on the National Renewable Energy Action Plan (PANER). The government has set a policy target of 9 percent of the population to benefit from that scheme. 72 percent of the population will gain access to the electricity grid by 2030, bringing the total electricity access to 81 percent. This is a significant jump from recent data ( from the Africa SDG Index Dashboard, 2018) of 17 percent. To make this a reality, a detailed roadmap is required; one that can unify all electricity data onto one platform, just as a starting point. On a logistical level, authorities will need to operationalize a measured plan of action to, among many others, create a business environment — regulatory and financial incentives, namely — conducive to small and medium enterprise (SMEs) operations. SMEs will play a leading role as providers of small scale off-grid systems in the march towards the 9% government target. In summation, private interests have a considerable market ripe for the picking, at least until 2030. With existing grid losses above the African average (of approximately 30% in 2014), an in-depth assessment of the areas in need of power technologies has to be carried out imminently followed by a carefully laid out roadmap specifying the means, support and financing by which to realise the aforementioned policy goals.