Solar power is not yet perfect for Africa but as costs trend lower, the longterm outlook is good for investors and users in a continent where 60 percent of people lack access to electricity, according to a MotleyFool report.
Solar energy will play an integral part in Africa’s electrification, the report says.
Here’s three reasons for Africa going solar: Africa is a sunny place; solar doesn’t need water or much grid infrastructure to produce electricity; and solar lacks the resource curse that dogs countries reliant for income on oil and gas drilling, says Jay Yao for MotleyFool.
Here are some companies identified by MotleyFool that will benefit from the production of solar power in Africa:
First Solar (NASDAQ: FSLR ), which specializes in making affordable utility scale power plants, said it will bid on South African projects in 2014.
Chinese solar company JinkoSolar (NYSE: JKS ) has already won a large order of 274 megawatts in South Africa.
Canadian Solar (NASDAQ: CSIQ ) is also set to benefit.
South Africa is very active, because of its wealth, in developing renewable energy resources, MotleyFool reports. It is a leading indicator of a future trend.
Total, the majority owner of SunPower (NASDAQ: SPWR ), was recently chosen to build a 86-megawatt project in South Africa.
Because it’s close to the equator, Africa gets greater solar radiation than European countries, making solar power more affordable. Africa has deserts near large cities, allowing for cheaper transmission.
Huge volumes of water are needed to generate power from coal, nuclear and natural gas. Salt water is not an option — it’s too corrosive to metals. Fresh water is scarce, and many African communities need it for growing crops and basic needs rather than for producing electricity.
Coal power, nuclear, and natural gas also need adequate power grids to transport power to homes. For many countries, building them is cost prohibitive. Solar panels don’t need water or an adequate grid to produce electricity.
In many parts of Africa, corruption goes hand-in-hand with drilling for oil and natural gas, according to MotleyFool. The ensuing diversion of money away from “better places for growth” is a major reason why many countries with great resource wealth have trouble developing their economies.
It’s harder to divert money from solar energy projects. The number of solar panels on rooftops or in utility scale projects can be easily counted as opposed to generally not knowing how much oil has been pumped from an oil field. Because of solar energy’s greater transparency, international agencies such as the World Bank and International Monetary Fund may be more willing to finance solar projects versus other methods.
