A look at Renewable Energy Value Chains

Renewable Energy Market and Business Opportunities

We appreciate energy in life because of what we can achieve when we have access to it when delivered with adequate quality and quantity. We use energy in its various forms at the household level for basics of food preparation and conservation, to comforts like heating and cooling our living spaces. On a larger scale, energy is used to drive industries. It is the bedrock of our modern way of life. It is little wonder then why a lot of activities come to a standstill whenever there is a break in electric energy supply. We need energy but a developing country like Zambia faces more challenges in providing access to energy. Keep in mind that the energy must be of good quality and affordable. Another increasingly important aspect is that of sustainability. These aspects form part of what is described as energy security. Energy is a vast subject area with many different players. Our interest today is how we can focus on developing habits of adopting cleaner and sustainable usage of energy using a perspective of business opportunities.

Towards Cleaner and Sustainable Energy

There is a current drive to safeguard global ecosystems by limiting carbon emissions to avert average earth’s temperature rising above by 1.5°C. The Intergovernmental Panel on Climate Change Fifth Assessment Report (IPCC AR5) guides that we are limited to 118 billion tons of carbon emissions (118 GtCO2) for the period 2018 to 2100. It is worrisome that the total carbon emissions just for 2017 were 36 billion tons! The term carbon emissions is a shortened reference to greenhouse gas emissions which include carbon dioxide, methane, nitrous oxide, and fluorinated gases. These gases cover the atmosphere with a warming effect much like what is obtainable in a greenhouse, hence the name. The gases come from human activities that include the burning of fossil fuels, farming, deforestation, and industrial processes.

We can see that a major contributor is the need to produce energy for various needs and at different levels. One of them is the usage of fossil fuels in the energy supply chain. These mainly include coal, oil, and gas to drive electric power plants, transportation, and industrial machinery. Other than carbon emissions, there are health problems and concerns that have been linked to these types of fuels. On the other hand, cleaner options abound. This creates the argument of pursuing either clean energy or relying on traditional sources. The argument almost always presents itself as a picture of the good versus the bad. And every time there is a discussion on developing renewable or alternative sources of energy, there is bound to be a standoff and resistance from players in the tradition energy sectors about economic opportunities that could go unexploited.

This need not be the case, however. What we need is to see the change as an opening of new business lines and ventures for the enterprising. For example, we still need backup energy and off-grid solutions that are not necessarily from diesel generators. We can have different sources.

New Business Value Chains

It seems the challenge of increasing demand for energy and with an ever-increasing share of it to come from carbon-neutral and sustainable sources should leave us in a worse situation. Thankfully, there are many options for energy access within the reach of many Zambians. Earlier this year, a survey was conducted by the Kafue Gorge Regional Training Centre (KGRTC) to establish the apparently low uptake of renewable energy options amongst Zambians. The target group was small and medium enterprises and entrepreneurs operating in the renewable energy sector. Some interesting results came out of the exercise. Respondents identified a lack of accessibility to affordable finance at the top of their lists. This was closely followed by a shortage of technical skills and general energy business management know-how. Another high-ranking response was the lack of renewable technology appreciation by the general population. The lack of skills in the sector can be addressed to develop a pool of experienced technicians and medium-scale energy production enterprises such as small electricity-generating power plants below 10 megawatts.

The International Labor Organization (ILO) is working with KGRTC on a project funded by the Swedish International Development Cooperation Agency, Sida to help address some of the gaps in the renewable energy and energy efficiency sectors. The project referred to as SkiDRES (Skills Development in the Renewable Energy Sector) will see the partnering of KGRTC and other private enterprises with technical know-how. The basis of this project is to facilitate the transfer of skills to various players who include large organizations like power utilities down to small entrepreneurs involved in the delivery of renewable energy and energy efficiency solutions. So far, organizations like Siemens Turbomachinery AB and Metrum, both from Sweden have come on board in the pilot phase to share their know-how. There are other firms, including locally based ones, that the project team has already engaged, and they should hopefully come on board before the second and main phase of the project commences sometime in 2020. The number of participating firms will go up.

The SkiDRES project is focusing on a range of areas from high-level stuff of power network integration with renewable energy, the stability of power systems and power quality. But as indicated earlier, the range of interventions in the project scale down to all areas of renewable energy and energy efficiency. There will be space for solar thermal and solar PV business for example. Wind, biomass, and energy efficiency management will also be on offer. An interesting outcome will be aimed towards developing competencies for putting up a bankable business case. The business case means we can develop competencies for entrepreneurs interested in running energy business consultancies. The skills transfer on the project will use different methods composed of course work, practice, and mentorships. It is a great opportunity for entrepreneurs who should rise to the occasion and provide carbon-neutral and sustainable energy solutions the market desperately needs. Even if there will be no direct financing opportunities, the skills should give an adequate grounding for the entrepreneurs. Skills on how to package projects which include financial modeling, business development plans, and power purchase agreements just to mention a few are useful even for established businesses. The SkiDRES project will be particularly accommodating to youths, women, and areas that address poverty in impactful ways.

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