19 votes

Why isn’t solar scaling in Africa?

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21 comments

  1. [19]
    vord
    Link
    Because if there's no profit, there's no reason to help build infrastructure in developing areas. That's why double the population of the USA has no access to electricity....because they don't...

    Because if there's no profit, there's no reason to help build infrastructure in developing areas. That's why double the population of the USA has no access to electricity....because they don't have the money to pay to recoup the costs.

    So, the answer is obviously that we need to come up with an incredibly complex (and easily exploitable) system of financial incentives to try to make it profitable.

    Rather than, you know, just giving them the money to build the infrastructure with no strings attached. Or the infrastructure itself if you're too feeling too paternalistic to let the governments build it themselves.

    13 votes
    1. [15]
      creesch
      Link Parent
      That is not going to work for a variety of reasons. In the best case scenario a lot of the money is going to go to other things governments think is more important. Historically when money tends...
      • Exemplary

      just giving them the money to build the infrastructure with no strings attached.

      That is not going to work for a variety of reasons. In the best case scenario a lot of the money is going to go to other things governments think is more important. Historically when money tends to be given to developing countries with no strings attached, a lot of it tends to disappear.

      And just building the infrastructure for them is also not a good idea as that will mean no maintenance after the initial build.

      And a lot of other reasons why development aid in general is much more complex than we realize. Including varies shades of avoiding neocolonialism.

      So in the end you want the countries and their economic market to mostly be able to take these steps and in a way that is sustainable. Which makes it complex by definition.

      20 votes
      1. [14]
        vord
        (edited )
        Link Parent
        I'll preface this: I don't want to blast walls of text at each other, I want it to be more conversational. That is the intent, not to be dismissive or curt. I'll accept that money vanishes. So be...

        I'll preface this: I don't want to blast walls of text at each other, I want it to be more conversational. That is the intent, not to be dismissive or curt.

        I'll accept that money vanishes. So be it, we're down to building infrastructure.

        Why wouldn't there be maintenance? Wouldn't that imply that nobody actually wanted the infrastructure?

        1 vote
        1. [12]
          R3qn65
          Link Parent
          It's just really hard. We take a lot of things for granted in the west. Setting aside all of the endemic corruption and bad governance issues in Africa, it's still hard. Here's what I mean. Canada...

          Why wouldn't there be maintainence? Wouldn't that imply that nobody actually wanted the infrastructure?

          It's just really hard. We take a lot of things for granted in the west. Setting aside all of the endemic corruption and bad governance issues in Africa, it's still hard.

          Here's what I mean. Canada recognizes that aid money tends to vanish, for both good and bad reasons. So Canada comes in and just straight up builds solar farms all over Chad, using Canadian labor to do so because that's the only way it can get done. Now they need to be maintained. Who's going to do it? Nobody in Chad has the skills. Really, the problem is more acute than that - few in Chad have the basic foundation to even be able to learn the skills (the adult literacy rate is less than 1 in 3). But setting that aside too, let's say Canada says "fuck it" and brings 10,000 chadians back to Canada for a vocational training program.

          Okay, now you've got guys who can maintain the infrastructure. Problem is, now they need to be paid. Not Western salaries, but it's still like adding 10,000 new government employees to the Chadian books, which N'djamena can't afford.

          So Canada - gritting its teeth at this point - says "fine, we'll pay their salaries too."

          But ultimately it's a moot point, because instead of living in the bush where the solar farms are, all the newly-trained engineers, who now have marketable skills, immediately emigrate to go find better lives for their families. They go to N'djamena if Chad is lucky, but it's more likely they leave the country entirely.

          Stuff is just so complicated. Every problem you solve, 3 more crop up.

          14 votes
          1. [11]
            vord
            (edited )
            Link Parent
            Ok, so....who is then demanding this electricity in Chad, if nobody is able or willing to learn to build or maintain it? If not the government, the businesses demanding it? Decentralized green...

            Ok, so....who is then demanding this electricity in Chad, if nobody is able or willing to learn to build or maintain it? If not the government, the businesses demanding it? Decentralized green power is even easier than it has ever been.

            Ideally Canada would just foot the bill for Chad to build it themselves, with supervisors and training.

            What were these people whom received vocational training doing before? Could they not be paid what they were before?

            I am doubtful everyone in Chad is sitting around doing nothing, just waiting for someone to plop solar panels down for them to suddenly start doing work.

            And if the answer is "they're agrarian, not being paid directly for work," then maybe they don't want to industrialize?

            1 vote
            1. [10]
              R3qn65
              Link Parent
              Edit: I am changing this post as I don't think it was fair to you. I am taking this as light sarcasm. I am not sure whether this is a joke or not.

              Ok, so....who is then demanding this electricity in Chad, if nobody is able or willing to learn to build or maintain it?

              Edit: I am changing this post as I don't think it was fair to you. I am taking this as light sarcasm.

              And if the answer is "they're agrarian, not being paid directly for work," then maybe they don't want to industrialize?

              I am not sure whether this is a joke or not.

              3 votes
              1. [9]
                vord
                (edited )
                Link Parent
                Colonialist is presuming that they actively want outside intervention, and in particular, providing it conditionally (IE unequal trade agreements). The last question is no joke. One of the early...

                Colonialist is presuming that they actively want outside intervention, and in particular, providing it conditionally (IE unequal trade agreements).

                The last question is no joke. One of the early problems of cities is that people kept leaving them. There's much speculation as to why, but the two biggest suspected factors boiled down to inability to consistently produce food without destroying the land, and depending on heavily authoritarian tactics to maintain unequal urban societies.

                So, the question remains: Who in Chad wants this infrastructure: the general populous, or the people in charge?

                I presume the majority of population is neither starving to death in perpetuity, nor so unhappy that they flee elsewhere.

                2 votes
                1. [8]
                  R3qn65
                  Link Parent
                  To be clear, we're talking about electricity here. Both the general populace and the people in charge want it.

                  So, the question remains: Who in Chad wants this infrastructure: the general populous, or the people in charge?

                  To be clear, we're talking about electricity here. Both the general populace and the people in charge want it.

                  2 votes
                  1. [7]
                    vord
                    (edited )
                    Link Parent
                    That doesn't answer my fundamental question though: If they want it so badly, why is it so hard to find people to build and maintain it? If eliminating initial capital costs does not solve that...

                    That doesn't answer my fundamental question though:

                    If they want it so badly, why is it so hard to find people to build and maintain it?

                    If eliminating initial capital costs does not solve that prior question, than in my mind the answer is simple: Because they do not actually want it.

                    An older child (like 12+ here, not 5) who says they want a pet, but upon getting the pet neglects it to the point it dies, did not really want a pet.

                    The more logical answer to me is that the West does not wish to give these resources without some level of return. Which means expectation of debt payments or below-cost resources. As said in the article:

                    He was under constant pressure to raise additional funds from shareholders and show results.

                    The problem isn't building the infrastructure. It's expecting returns, and only providing that infrastructure under some guarantee of a return instead of defaulting on debt....which is a very colonial attitude towards improving living conditions, is it not?

                    2 votes
                    1. [3]
                      creesch
                      Link Parent
                      This was actually explained two or so replies earlier. You mentioned earlier that your intent is conversation, but that also does mean listening with the intent to understand, not just to reply.

                      If they want it so badly, why is it so hard to find people to build and maintain it?

                      This was actually explained two or so replies earlier. You mentioned earlier that your intent is conversation, but that also does mean listening with the intent to understand, not just to reply.

                      11 votes
                      1. [2]
                        vord
                        (edited )
                        Link Parent
                        I will try to restate the discussion, as I feel it has evolved. Because I do not feel I was ignoring the replies. There are two core problems under discussion (which are caused by somewhat...

                        I will try to restate the discussion, as I feel it has evolved. Because I do not feel I was ignoring the replies.

                        There are two core problems under discussion (which are caused by somewhat tangential problems), which are very much a chicken and egg problem. Chad being the chosen representative of undeveloped countries as a whole.

                        • Chad lacks infrastructure
                        • Chad cannot sustain infrastructure

                        Much of the original article revolved around that first point, how to solve this with strings attached, namely attaining returns on investment. My initial post proposed solving the problem of providing that infrastructure, no strings attached....because the only way to genuinely solve the problem is to break the cycle.

                        R3qn65 approached it from the other side, (correctly) identifying the lack of education and brain drain (when the education is provided) as the reason for not being able to sustain the infrastructure. I didn't state it directly, and maybe I should have. I felt the "who really wants this" was encompassing that, but that could be because I didn't explain myself properly.

                        Because if the people whom become educated to maintain the infrastructure leave that infrastructure behind when they learn to do it....that means they did not want the infrastructure for their homes and families, they wanted to leave Chad behind. If they didn't want to leave Chad, brain drain wouldn't be a recurring problem after infrastructure was bootstrapped by gifting.

                        Expecting returns on the bootstrapping infrastructure puts the global south perpetually in debt to the nations which do the bootstrapping. Because infrastructure costs money to maintain, but they also must now pay debts to pay off the initial build while still trying to bootstrap maintenance costs. Which means putting even more economic demands on land via say oil extraction or by making farming less sustainable (growing more on less land). And since the emphasis is on private market-oriented returns....that means more battles to be fought over who owns these resources further destabilizing an already fragile region.

                        Part of the reason I phrased my initial post as I did was to highlight that the main desire isn't to provide infrastructure and improve living conditions, but to further exploit the global south. So, in my mind, if we do not wish to freely give the infrastructure, the proper answer is to allow all residents to freely emigrate out from their countries without demanding that they have marketable skills first.

                        1 vote
                        1. creesch
                          Link Parent
                          I am just going to assume that Chad is a random example you just did happen to pick. As the article doesn't mention it. I still maintain that you have been engaging here by either not really...

                          I am just going to assume that Chad is a random example you just did happen to pick. As the article doesn't mention it.

                          I still maintain that you have been engaging here by either not really internalizing some things written. Or, as I said elsewhere, by attempting to simplify things to the point where they are being misrepresented.

                          For example, you keep mentioning returns of investments as if that is the highlight of the article. While the article approaches from the other way around.

                          They are designed to work with investors, companies, and governments to mitigate risks and drive down the costs of projects that would deliver impact but can’t yet take off organically.

                          Yes, for investors very likely will be looking for a return on their profit. But if the risks are very high they might still invest but with interest rates and such that it becomes much more like the problem you seem to be describing.

                          And to be more explicit on where you are over simplifying to the point of being harmful. Here you are

                          .that means they did not want the infrastructure for their homes and families, they wanted to leave Chad behind.

                          What people universally want is a better life for them and their family, then friends, neighbors, their community, country and finally humanity. In that order, I skipped a few steps going to humanity, but you should get the idea. Moving to a richer country, being paid more will provide for the first and often also for the second as migrants like this will often send money home.

                          Which is a very valid reason. You can't simply state that people don't have enough ideals, or else they would have stuck around. That's only a valid reason in theoretical setting where there are no other reasons at all. Which is not based on reality, boring conversation and harmful when discussing real world problems that are much more complex.

                          At this point I have to agree with @R3qn65, so I am also going to step out of this conversation.

                          7 votes
                    2. [3]
                      R3qn65
                      Link Parent
                      Hey dude, I am certain you aren't intentionally being offensive here, but I want to point out that comparing Africans who need critical infrastructure but struggle to maintain it due to systemic...

                      Hey dude, I am certain you aren't intentionally being offensive here, but I want to point out that comparing Africans who need critical infrastructure but struggle to maintain it due to systemic issues to kids who say they want a pet is fairly offensive. It's not a good analogy.

                      For that reason I think we should probably leave this conversation here.

                      9 votes
                      1. [2]
                        vord
                        (edited )
                        Link Parent
                        I could see how it could be interpreted that way I suppose. But again, you've mostly just attacked my exact wording rather than the crux of the arguement, aside from handwaving as a "systemic...

                        I could see how it could be interpreted that way I suppose. But again, you've mostly just attacked my exact wording rather than the crux of the arguement, aside from handwaving as a "systemic issue."

                        To me, the systemic issue is that it's a war-torn country, one that has become increasingly so as a result of the addition of oil extraction.

                        For as long as anyone can remember, a set of (often unwritten) rules have applied to the use of land and other resources. Ownership was defined by tradition. The rules address issues like access, management and transfer both for individuals and groups. The rules are well known and accepted among the communities that apply them. They vary considerably from region to region. They reflect overarching principles that are recognised as a kind of customary law.

                        In past decades, the community rules worked out well. Enough rain fell to sustain the extensive farming of certain well-chosen crops in southern Chad. The rains were predictable, and droughts were rare. The yields were never very high, but they were sufficient. The economy was not thoroughly monetised, and the sense of solidarity and family ties was strong. Population density was low, so there was enough land for everyone. Farmers kept their fields fertile by allowing them to lay fallow for long periods of time.

                        To me, it looks like the ones most seeking electrification are the (very small) urban population and warmongers. The majority of the population (as best I can tell) would be happier to be left out of the wars for the oil under their farmlands, even if it means no electricity.

                        The need to use more intensive agricultural methods are being driven by the expansion of the urban population, which is putting extra pressure to produce more food with ever-decreasing land (because the ranchers and extractors need more).

                        It's almost as if the industrialization cycle is at least moderately incompatible with sustainable agriculture. Because sustainable agriculture relies on not constantly exploiting every possible square inch of arable soil, and not having to export masses of crops to growing percentages of populations that not only do not assist with the production of food, but also take away land from the people producing food to extract resources like minerals and oil.

                        3 votes
                        1. R3qn65
                          Link Parent
                          I explained in detail why it's difficult to find people to maintain complex infrastructure in an earlier post, which you've ignored. As for the rest, I cannot believe that anyone repeatedly...

                          I explained in detail why it's difficult to find people to maintain complex infrastructure in an earlier post, which you've ignored. As for the rest, I cannot believe that anyone repeatedly arguing that Africans would rather not have electricity is posting in good faith, and so I'm not willing to engage any further.

                          9 votes
        2. creesch
          Link Parent
          We are now edging very close to neocolonialism "they can't do it, we will just do it for them". This is almost an entirely additional conversation to have. So I'll park it for now. Someone else...

          So be it, we're down to building infrastructure.

          We are now edging very close to neocolonialism "they can't do it, we will just do it for them". This is almost an entirely additional conversation to have. So I'll park it for now.

          Why wouldn't there be maintenance? Wouldn't that imply that nobody actually wanted the infrastructure?

          Someone else already explained this. If you just place down any infrastructure with your knowledge, it means that there are very few people in the country with the knowledge to pick up maintenance. I am not entirely sure where you made the connection to that meaning they don't want the infrastructure. Education in itself is expensive, maintenance itself is expensive.

          This is not a new conversation either. This conversation could have taken place 10, 20, 30, 40 or 50 years ago just with different types of infrastructure.

          If you just give countries infrastructure they might benefit somewhat short term but long term it creates all sorts of issues once it starts to fail and breakdown.

          So I'll have to circle back to my initial point. In the end you want countries to be able to take most of these steps themselves within their own economics means and knowledge they have available. It's about setting up for success, not just setting up.

          Edit:

          I just saw your replies further down. Simplifying issues can sometimes help to understand them better. Oversimplifying issues will lead to the opposite and be actively be harmful.

          5 votes
    2. [3]
      OBLIVIATER
      Link Parent
      The reality is probably that Africa is going to become the "China" over the next century. Huge swaths of abused cheap labor and massive growth in infrastructure. China knows this and is already...

      The reality is probably that Africa is going to become the "China" over the next century. Huge swaths of abused cheap labor and massive growth in infrastructure. China knows this and is already investing hundreds of billions of dollars into the African economy by "donating" infrastructure, buildings, etc.

      9 votes
      1. [2]
        R3qn65
        Link Parent
        For better or for worse, we haven't figured out an economic model for growth that doesn't involve this stage at some point or another. Every major economy of which I'm aware has done it... It...

        For better or for worse, we haven't figured out an economic model for growth that doesn't involve this stage at some point or another. Every major economy of which I'm aware has done it... It seems like the best we can do is to pass through the industrial era as quickly as possible.

        1 vote
        1. vord
          Link Parent
          And that's kind of the point I was trying to make in the sibling thread...maybe a large enough portion of the population is at least somewhat aware of this and is not exactly chomping at the bit...

          And that's kind of the point I was trying to make in the sibling thread...maybe a large enough portion of the population is at least somewhat aware of this and is not exactly chomping at the bit to become (further) exploited by the wealthy countries.

  2. [2]
    skybrian
    Link
    From the article: ... ...

    From the article:

    There are many reasons for the shortage of solar investment in sunny Africa. Costs are always higher in riskier markets, and consumers are less able to pay for power. The national utilities expected to sign long-term solar contracts are mostly bankrupt because politicians don’t like to pass the full costs of producing electricity onto consumers. African governments that typically backstop solar farms with public guarantees are under mounting debt distress, so they’re less able to calm the fears of investors. And, of course, the effects of the pandemic drove interest rates higher and squeezed supply chains, all of which derailed potential projects.8 If built today, the same solar farm will cost twice as much in Ghana as it does in the United States due to interest rates alone.

    Yet these barriers are precisely what development finance agencies are built to overcome. They are designed to work with investors, companies, and governments to mitigate risks and drive down the costs of projects that would deliver impact but can’t yet take off organically. A suite of tools — below-market loans, risk insurance, and guarantees — can help to catalyze projects in places where the private sector is too scared to go. Solving the missing solar boom in Africa is a challenge tailor-made for them. And none more so than the World Bank.

    ...

    Despite the claims of being subsidy-free, the IFC was open about financing and project support. But in the early stages, their magnitude was not made clear. Although the interest rate and tenor of loans provided have not been disclosed, reasonable assumptions suggest that the cheap debt financing of the project amounted to roughly a $10 million yearly subsidy. Others — extensive project preparation carried out by the IFC, the halo effect of investments from the World Bank, and the land costs for the project — were implicit. In total, Emery estimates that every $1 of financing from the various development actors catalyzed only 28 cents of private sector financing. As he notes, “Private investment was additive, but it was not multiplicative.”

    Subsidies can be hidden, denied, or relabeled. But, in the end, they always have to be paid by someone. And if the next project doesn’t have them, the math no longer works. If the whole premise of Scaling Solar is based on special payments that are hidden, there’s little chance it can deliver on its objectives of making solar cheap, easy, and market-driven.

    ...

    On the one hand, it’s understandable that Jim Kim wanted to declare victory. He was under constant pressure to raise additional funds from shareholders and show results. Premature celebration of one promising pilot project could perhaps be forgiven. But the way that Scaling Solar was oversold actually wound up damaging solar markets in other countries. If Kim’s pitch was correct and everyone could get 5 cent solar for just doing simple things, who would ever pay more?

    Nigeria was one obvious victim. Around the same time that Scaling Solar was getting off the ground, Nigeria’s planners were hoping to add solar to an energy mix heavily dominated by gas plants and diesel generators. In 2016, contracts were signed with 14 different private solar developers that would have brought $2.5 billion in new investment and added over 1,000 megawatts of clean power to the grid. The agreed price was 11.5 US cents per kilowatt-hour — high by global standards but the outcome of a largely competitive process and arguably justified given market conditions. Most of all, it was the very first step for Nigeria — a massive economy with more than 200 million people that was generating less than 1% of its grid electricity from solar. But then, citing the lower prices reported from Zambia, the government of Nigeria balked. The solar farms stalled. Some of the contracts were later renegotiated, but, nearly eight years later, none of the 14 have been built. Solar still accounts for less than 1% of Nigeria’s grid capacity.

    2 votes
    1. R3qn65
      Link Parent
      Thanks for posting this topic. Development in Africa is fiendishly complicated and this is a good look at one way it didn't work out - with the hope that next time will be better.

      Thanks for posting this topic. Development in Africa is fiendishly complicated and this is a good look at one way it didn't work out - with the hope that next time will be better.