Comment: With rich raw materials and rising interest in manufacturing capacity, the continent can become a global leader in the battery storage value chain – but it needs international capital
Olivia Carballo is managing director in the emerging market alternative credit team at Ninety One.
In rural locations across Africa, renewable energy infrastructure such as hydroelectric dams, wind turbines and solar panels have been developed at impressive speed over the last ten years.
However, despite an increase in renewables production, the energy is unable to benefit communities and businesses plugged into national grids due to the lack of battery storage systems.
Powering Nigerian developers’ laptops, fuelling Ugandan taxi drivers’ electric boda bodas, or refrigerating Senegalese researchers’ vaccines will require tremendous amounts of power supply. But the benefits of renewables will only be realised if the right infrastructure is in place.
The financing of utility-scale battery storage systems, which remains a nascent technology in Africa, is key to ensuring that African countries secure reliable access to electricity, enabling communities to benefit from new infrastructure projects coming online.
Next-generation tech more affordable
Historically, funding for Battery Energy Storage System (BESS) has been a challenge due to the high cost of the technology. But recent advancements in battery technology efficiency signal a shift towards more affordable solutions.
The price of lithium-ion batteries, which reached a record low of $139/kWh in 2023, is set to drop further to $80/kWh by 2030, according to research firm BloombergNEF. This offers a cost-effective solution for sparsely populated areas such as rural West Africa.
Simultaneously, pumped hydro storage – which consists of two water reservoirs at different elevations that generate power as water moves between them – presents a unique opportunity in regions like Central Africa.
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Countries such as Cameroon, whose pumped-storage potential is estimated at 34 GWh, can leverage hydropower for base generation while retaining the flexibility to integrate wind and solar energy into the mix.
Another emerging innovation to increase BESS uptake is the development of battery-as-a-service (BaaS) business models, which aim to motivate residential, commercial and industrial consumers to invest in battery storage technology through a leasing model, reducing upfront costs.
This creates opportunities for electricity transmission and distribution companies to upgrade dilapidated infrastructure with BESS technology, ensuring that energy is evenly distributed to the grid while minimising capital expenditure.
Energy storage hotspot
Beyond meeting local and regional energy needs, battery storage has the potential to stimulate the growth of a strategic new industrial sector in Africa. The continent holds at least one-fifth of the world’s reserves in a dozen minerals that are critical for the energy transition, including the lithium used for electric vehicle batteries and grid-scale storage.
Strengthening local supply chains and manufacturing could position Africa as a global leader in battery technology,