Regulation and policy initiatives for sustainable energy in sub-Saharan Africa. Chapter 1

Environmental change and sustainable development present a challenge for all nations. Developed countries have to dismantle and change historic practice before progressing, whereas developing countries can move directly to new technology and new institutional frameworks. This chapter seeks to identify trends in energy supply and use that both improve sustainability and provide opportunities for commerce and industry. Worldwide experience is studied for application in sub-Saharan Africa (abbreviated as 'Africa' henceforward). Such application is central to UNIDO's programmes in energy and environment. These programmes consider both the supply and the demand sides, by the provision of energy for industry, use of renewable energy resources and improved industrial energy end-use efficiency. Key factors are de-linking intensity of energy use from economic growth and reducing environmental damage from energy supply and use The background for this chapter is 'Sustainable Energy Regulation and Policy-making for Africa', a set of 20 training-modules produced for UNIDO and REEEP (the Renewable Energy and Energy Efficiency Partnership). The modules will be used by governments, regulatory offices and industry in Africa for stimulating policy and commercial development in renewable energy and energy efficiency. Of particular relevance is the general trend to more liberalized electricity supplies, as regulated within new legislation. Within each country, institutional frameworks can be changed and improved for the benefit of both citizens and commerce alike. There is a common trend worldwide to include institutional mechanisms for the increase of renewable energy generation and the efficient use of energy within regulatory legislation, e.g. (Harrington et al., 2007). Government involvement and ministerial regulation is most common for electricity. In all countries, the introductory stages of electricity supply have been strongly influenced by national and local government action and ownership. However, once initiated, an established market economy, involving many competitive private companies, should produce electricity at less cost to the consumer and the nation, than if wholly owned and operated by government. Such improvement requires a carefully constructed legal framework, especially because there are many monopoly aspects of electricity supply. The administration and control of the legal objectives requires jurisdiction, usually by the appointment of a Regulator with a specialist and independent staff. Thus, hand-in-hand with the liberalization of energy supplies is the requirement for regulation. Since 1990, liberalization of energy supply, especially of electricity, has been introduced throughout Europe. The main actions have been at national level; consequently, individual national policies and methods dominate. Nevertheless, having an integrated European electricity grid encourages commonality throughout Europe. Associated with liberalization is the growth of private company participation and hence the need for legally enforceable regulation by a Regulator. The pattern of development in Europe is similar to many other world regions including North America. However, European electricity supply is older and the population more concentrated than in most other regions, therefore the opportunity for structured liberalization came first in Europe. Consequently, the European experience is important for formulating policy elsewhere, including Africa. However, without competition from several private companies for each contract, liberalization may well fail to deliver the improved services and reduced energy tariffs expected; chapter three considers such experience. Coincidentally with the trend to energy supply liberalization, has come the need for renewable energy supplies and increased energy efficiency. This change is promoted by several factors, including: sustainable development, new technology, reduced emissions and climate change. New technology enables improvements in the efficient generation and use of energy, thus bri nging financial savings and reduced environmental impact. Renewable energy, e.g. sunshine (solar), wind or biomass, utilizes local resources with no fossil fuel costs, with acceptable emissions and with enhanced security of supply. The turnover for European business in energy efficiency and renewable energy is now of the order of 25 billion euro per year, associated with about 150,0004 full-time-equivalent jobs. Such economic activity provides stimulation for similar industrial and commercial development in Africa. The need to improve energy-supply security and the necessity to reduce carbon dioxide emissions, have led to legislation and targets to increase the efficient use of energy both by good management practice (which is cheap) and by targeted capital expenditure (which usually has rapid payback time, perhaps less than a year and usually within three years). Using energy more efficiently is highly profitable for business