Building a more resilient energy system across East Africa
So, how can East African countries meet their energy needs to fuel achievement of their development goals? From our experience, we recommend three areas for intervention that go beyond solely generating megawatts and connections to addressing systemic challenges that hold energy systems back.
1. Countries should assess generation from their own national power resources and the national demand they can expect from customers. Least cost power development plans and “high-demand” scenarios are common among East African utility partners; however, few are using real-time data and consistent monitoring to adapt.
Better planning informs more accurate costs for power, which, if passed on to the consumer, can generate greater demand and improve affordability. Additionally, once a country can assess national resource potential and costs of development, they have a better understanding of their own energy security and can determine if power trade with other regional neighbors is advantageous.
For example, under EAEP, we supported Rwanda to develop a national power resource assessment system to inform their bi-annual power generation plans. EAEP met weekly with utility counterparts and Ministry of Infrastructure representatives to increase their capacity to conduct these assessments themselves and recalibrate their energy needs based on findings. This work is being expanded to integrate greenhouse gas emissions reduction, climate change mitigation and resource planning, which will help Rwanda adapt to climate shifts while enabling it to achieve its goal of net zero emissions by 2050.
2. Regulators and utilities should set tariffs that more closely match actual costs.
Regulatory agencies are often bound by political caps to keep tariffs low. This practice ignores utilities’ need to generate revenue, without which they can’t update infrastructure, leading to less reliable distribution of energy which further impedes customers’ willingness to pay.
One outlier is Uganda, whose Energy Regulatory Authority (ERA) holds the top spot for regulators in sub-Saharan Africa, according to the African Development Bank. Regular engagement between Uganda’s many utilities and service providers and ERA has led to more cost-reflective tariffs that support utilities’ health and their independence from outside influence. EAEP is conducting a benchmarking study to help ERA unpack equipment and material costs for transmission and distribution so it can incorporate reasonable costs into tariffs.
3. Focus on loss reduction and revenue generation for distribution utilities.
Utilities, as the link between producers and customers, are critical to power affordability and reliability. Utilities’ strength is in their ability to provider power to many customers at a low cost. Yet, according to the African Development Bank, most electricity companies in sub-Saharan Africa are insolvent and require government support to operate and expand access.
Hampered by political and industrial needs to produce more power and connect more customers while still being structured as government bodies or while transitioning to parastatals leaves them unable to recuperate costs from customers, advocate for cost-reflective tariffs, and invest in improvements that would increase reliability, leaving them continuously at risk.
EAEP and its utility partners in Kenya, Ethiopia, and Zanzibar are finding solutions. EAEP advisors work closely with utility staff to map customers, update organizational flows, plan anti-theft enforcement, re-engineer business processes, improve meter reading practices, and more. These methods contribute to better utility control over commercial losses and help them regain essential revenue for utility health. When they can offer reliable, efficient, and affordable power, they can draw users away from backup generators or captive power solutions.