Africa’s petroleum industry must not be frightened by the advancements being made by renewable energy. Aside the fact that fossil fuels would continue to play a key role in the global energy equation, the petroleum industry can still take a bite at renewables; the new kid on the block.
Africa’s petroleum handlers must not be seen to be against or be threatened by renewables, whose costs and consumption have seen positive changes in recent times. Whilst they seek to guard against devaluation of their petroleum resource with the inroads made by particularly solar and wind, they must identify with the value that stands to be added to the continent’s abundant wind and solar resources.
The transition to renewables is a global one because they have been found as cost-effective, and sustainable source of new energy that insulates power markets and consumers from volatility, spurs economic stability, and stimulates sustainable growth.
Diversification to renewables is therefore a panacea to the daunting electricity supply challenges that Africans have had to grapple with due to an under-developed power sector that requires a huge expansion in its generation and grid capacity.
If Africa policymakers are ever serious to provide universal and secured electricity access to its growing population, then the time to focus on resource diversification, the time to diversify to greener and least-cost fuels, is now.
While the price of oil and natural gas keeps dropping, the price of power generated by solar and wind in particular is falling too. Policymakers and petroleum industry players in Africa must be prepared to embrace both fossil (non-renewable) and renewable fuels. They must recognize the degree to which the energy transition can deliver positive outcomes for the continent. Running away from reality rather has a huge consequence not only for the industry but for the continent as a whole. Efforts should, therefore, be channeled to harnessing both resources which are significantly huge in reserves.
Africa’s oil and gas producers must demonstrate that they are aware of the risks and opportunities that come with renewables, and rather take steps to manage the situation. To see the diversification to renewables as counter-productive because of the continent’s vast petroleum reserves, and tag it as a Western solution, is to be ready to be out-played in the next big game.
Oil and gas majors are in recent times showing interest in declaring a net-zero goals to decarbonize by 2050. First, because it was an agreement reached to at the United Nation’s (UN’s) climate conference in Paris by governments around the world, which mandates countries to align with. Second, energy investors have become increasingly nervous about the role of the fossil fuel industry in a low carbon dioxide (CO󠇯2) emissions climate future.
Third, environmentally aligned investors have decided to opt-out of companies and industries not perceived to be sustainable. And finally, hydrogen which could easily be derived from renewable generated electricity, has been established to burn cleanly, making it an attractive alternative fuel source.
The majors are progressively positioning themselves for the proclaimed energy transition, pursuing strategies to move from oil to energy companies. Hydrogen that is derived from water (H2O) through a process that runs on renewable electricity, is seen as an attractive fuel source for oil companies that are trying to ensure their continued relevance.
Investing in hydrogen has taken on a new urgency, with majors such as British Petroleum (BP) and Shell, spending millions of dollars on pilot projects. According to Bloomberg Green, supplying hydrogen could potentially become a huge market that oil and gas companies could dominate quickly, thanks to their existing expertise in transporting and marketing gas.
In the face of record low oil prices, some oil and gas companies see hydrogen as a lifeline and are therefore throwing their dollars at cheap electricity generated from renewables, to share in the renewable boon.
If you can’t beat them, you join them. Smart, isn’t it?