Thesis (Ph.D.)--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Law, 2016. / Africa is challenged by the lack of stable modern electricity which is essential for economic and social development. Many African communities, especially in rural and sub-urban areas, are not connected to the national grid and thus constrained from developing and their continued use of traditional sources of exhaustible energy cause environmental pollution. Distributed renewable energy technologies can help to address the problem of modern energy provision in many of Africa‘s communities. Finance plays a critical role in the development of renewable energy within countries. It bridges the gap in the development of renewable energy projects (REPs). Governments‘ efforts towards developing REPs for scaled-up renewable energy to impact the energy access challenge measurably have been inadequate. Thus, this dissertation focuses on increasing the financial contribution of the private sector in developing REPs, especially within rural communities. Models of financing REPs within selected African countries are analysed, with focus on financiers‘ perspectives and governments‘ ultimate goal in financing REP development. A key objective is to bridge the gap between private sector financiers and policymakers in government in this REP financing effort. The study uses the mixed methodology approach to develop a framework through which REP development is related to the perspectives of financiers and policymakers as to enable reliable and useful research findings. Broadly, the results show that while REP financiers are mainly focused on the profitability of their investments, policymakers are mainly focused on the prospects for sustainable economic development. This divergence presents a key obstacle to the development of renewable energy within African countries. Further, results show that traditional financing methods have been largely ineffective in promoting development of REPs in African countries, hence the need for innovative financing channels to increase REP development in Africa. Also, financiers of REPs in Africa consider renewable energy to be highly risky even when supported by government policies. The fledgling capital markets in many African countries need to be further developed to provide appropriate hedging mechanisms while financing small and medium scale REPs. This study also proposes financing models that amalgamate financiers into a small ―financing consortiums‖ using project finance to fund localised renewable energy service companies (ESCOs) with expertise in finance and REP development; kind of models that spread risk among a number of investors, thereby reducing the potential risks of investments while delivering on the objective of sustainable economic development.

M.Phil. / Please refer to full text to view abstract

In terms of economic development, internal availability of energy in a region means the capability to produce essential goods and services for the improvement in the quality of life of all the economic agents. Economic development consists in large part of harnessing increasing amounts of energy for productive purposes or by making more efficient use of available energy resources. In this dissertation, the future electricity supply and demand interactions are examined for seven countries in West Africa: Benin, Ghana, Ivory Coast, Niger, Nigeria, Togo, and Upper Volta. A description of the primary energy resources (coal, hydro, natural gas, and oil) available in each country is presented. The future demands for electricity in the medium term (1980-1989) are projected through econometric models developed in the study. Two sectorial models for each country's economy, the residential sector, and the commercial and industrial sector, are presented. Multiple regression analysis is applied in the estimation of all demand equations. Major determinants for electricity demand used in the estimation for the residential sector were average price of electricity, real personal income, and the number of households with access to electricity. Data on these variables were obtained from international organisations such as the United Nations and from government publications for the period 1960-1977. Each of these determinants was found to be significant for most countries; however, their relative importance differ across countries. Similarly, average price of electricity, real output, and employment were major determinants used and found to be significant in the demand for electricity in the commercial and industrial sector of all countries. Price and income elasticities were obtained from the estimated equations. A general multi-region supply model was developed to structure the future electricity supply possibilities in the countries involved. The objective of this model, using linear programming, was to seek the least-cost combination of resources (primary energy, capital, and technology) for the production of electricity. The impacts of various levels of resource availability on average cost of electricity were examined for each country, and for joint development efforts using a non-integer, deterministic, linear version of the general model. The application of the supply and demand models to West Africa over the decade to 1989 reveals that except for Nigeria, all countries in the region will require fossil fueled systems to supply additional demands for electricity, because all hydro resources would have to be exploited by the mid-1980s. This will lead to higher costs in producing electricity. However, Nigeria is expected to have excess electrical energy if plans initiated in its third development plan are completed. The extension of transmission lines between Nigeria and Benin could effectively distribute the relatively cheaper energy from Nigeria to other countries, since adequate transmission network already exists between most of the countries.