With millions of households and businesses across Africa still unable to access affordable, clean and reliable energy, the continent must focus on improving distribution networks and ensuring proper management right down to municipal level.

This is according to power industry leaders who were speaking during a panel discussion on power infrastructure at the Sustainable Infrastructure Development Symposium South Africa (SIDSSA), hosted by Infrastructure South Africa (ISA) in Cape Town.

Foundation for economic growth

Govindranath Gunness, Minister of National Infrastructure of Mauritius, noted: “Energy isn't just another sector of the economy - it is the foundation on which modern economies are built. Yet Africa continues to face an enormous energy deficit. As of 2024, around 600 million people in SSA still lack access to electricity. More than one billion people across Africa lack access to clean cooking. The fundamental question is how do we bring reliable, affordable and clean energy to towns, farms and small communities? We start with modernising the grid: Africa must invest in the backbone of its energy system.”

This meant not just building more power plants but also investing in the crucial transmission grids, he said.

“We need a combination of modern transmission networks, stronger distribution systems, renewable energy, mini grids, micro grids and off-grid solutions supported by innovative financing and strong local capacity,” the Minister said. “We start with modernising the grid - the backbone of energy security. Africa must invest in modernising transmission and distribution infrastructure.”

When electricity powers small business, it becomes much more than a household connection, but is an economic development platform, he said.

Taking ownership of the last mile

Alexandra Abrahams, Deputy Minister of Electricity and Energy, highlighted the urgent need to connect over 1.6 million South Africans who don’t have electricity in their homes.

She said: “Infrastructure will be one of the most critical enablers to do this, and the government purse cannot do this alone. The government has been very busy creating an enabling environment - for example through Operation Vulindlela tackling systematic bottlenecks, the Electricity Regulation Amendment Act, and the updated Public-Private Partnership Framework and work on the credit guarantee vehicle to fund infrastructure.”

Local government plays a very important role, she said: “It’s one thing to talk about generation and transmission, but that energy must reach plugs in homes and businesses. Municipalities need to ensure their distribution networks are maintained and that the revenue they generate from electricity goes back into the economy.”

The Deputy Minister highlighted work to put in place to drive Distribution Agency Agreements (DAAs), in which Eskom steps in to manage local electricity distribution, billing, and revenue collection on behalf of financially distressed municipalities.

Janice Foster, Managing Director: Energy at Zutari, said: “At a local level, electricity failure comes down to a lack of maintenance. Outages and system losses are purely a symptom. The drivers of that are consistent across Africa: electricity revenue surpluses are often treated as general municipal revenue and are not being reinvested back into electrical asset management and maintenance. The resulting technical and non-technical losses compound year on year and become more costly to address every year.”

In addition, she said the losses of technical skills meant that those failures will continue to repeat and impact households and businesses.

“In Johannesburg, for example, there is currently a R44 million backlog in maintenance, and restoration takes an average of 14 hours. This is not so much a technical failure as a governance failure.”

Foster said: “By investing in complete and detailed asset registers, undertaking condition assessments to establish the baseline and using these as a basis for proacting maintenance strategies, municipalities can then use these as a basis to find funding solutions.”

Rentia Van Tonder, Head of the Power & Renewables Sector, Client Coverage at Standard Bank Group, said: “It is important to acknowledge the role financiers play.”

She noted that Standard Bank operates across 21 countries in Africa and has funded more than 13 Gigawatt of new generation.

“What we find is that there is not a specific solution appropriate for each country, which is why flexible power solutions are critical. For one country coal still makes sense, while another country has an abundance of renewable power and one needs to leverage that. The critical thing is the cost of power production, and linked to that what the tariff will be to the households.”

Making the last mile bankable

Van Tonder added: “Linked to that is how do you bring in the transmission side and build out decentralised power systems? As a bank we have stepped in and helped get the whole bankability solution effective, to be able to execute. We can’t ignore the importance of transmission grid optimisation and efficient energy management systems.”

Karen van der Merwe, JETP Lead at Adam Smith International, noted that banks would not finance projects unless there was a revenue stream to repay the loan.

“It’s critically important for the operations to generate revenue,” she said. “Currently, our municipalities have a lot of challenges, a huge amount of needs and things that need to be fixed before revenue can be generated. So we aren't seeing opportunities for PPPs at the local government level.”

“What we are currently seeing through the Just Energy Transition is a results-based financing instrument. In this, there is a sovereign loan and a credit guarantee from international partners. The loan benefits municipalities, but it is not going to municipalities. They are not repaying the loan, but they are getting the benefit of the infrastructure. The funding is conditional on municipalities accepting that it will result in infrastructure. The beauty of results-based financing is that the conditions are set by the lender and the money doesn't flow unless the results are seen. It results in infrastructure with limited risk to the lender, and the benefit to the municipality is that the infrastructure is enabled, they don't need to procure or implement it, but they need to enable it.”