São Tomé and Príncipe has one of the highest electricity costs in Sub Sahara Africa. The sector remains subsidized, tariffs are not cost-reflective and the financial burden affects the macro-economic stability of the country. Due to the outdated transmission and distribution system the electricity supply is characterised by frequent power cuts, which forces businesses to run on stand-alone diesel generators. Still around 20% of the population in rural areas has no access to electricity. The majority of the population has no access to sustainable cooking services and relies on traditional biomass and charcoal.
In this context, the United Nations Industrial Development Organization (UNIDO) and the Ministry of Public Works, Infrastructure, Natural Resources and Environment are implementing the project “Strategic program to promote renewable energy and energy efficiency investments in the electricity sector of São Tomé and Príncipe". The project receives funding from the Global Environment Facility and is being implemented between 2019 and 2023 in close coordination with the United Nations Development Programme, World Bank and the African Development Bank.
The project contributes to the Vision 2030 “São Tomé e Príncipe 2030: the country we need to build", which aims to transform the country into a climate-resilient and vibrant island hub for blue economy business, financial services and tourism, benefitting from the growing regional market of the Economic Community of Central African States. The success of the vision highly depends on a power sector reform and a transformational shift of the economy from fossil fuel import dependency to renewable energy and energy efficiency. Such a transition will lead to a reduction of diesel spending and will free-up scarce hard currency for socio-economic development and climate change adaptation.
Despite the vast renewable energy potentials on the island the starting point for the UNIDO project is challenging. The country experience is limited to outdated or non-functional colonial small-hydro power stations, and small solar PV applications for rural households and productive uses (e.g. irrigation for agriculture, telecommunication and conservation of fish). The technical and commercial electricity losses exceed 30% and no energy efficiency targets and standards are in place. Due to the high risks the private and financial sector is hesitant to invest in energy generation and distribution infrastructure.
The sustainable energy market uptake remains hindered by multiple barriers related to policy and regulation, institutional capacity, knowledge and awareness, qualification and certification, finance and local accessibility of technology and expertise. A major constraint are the weak governmental capacities regarding energy planning and the enforcement of a coherent policy and regulatory framework. The latter is a prerequisite for attracting commercial and concessional finance, as well as foreign direct investment. Currently, there exists no national energy policy covering the entire sector and interrelated cross-sectors.
To develop a holistic sustainable energy vision, UNIDO is currently supporting the Ministry in the development of National Renewable Energy and Energy Efficiency Action Plans. The plans will include quantifiable and feasible overall targets and sub-targets (by sector, thematic area and/or technology) by 2030 and 2050. A set of concrete and attainable policy actions with clear responsibilities and costs will be proposed. The plans will complement and enlarge the scope of the recently developed Least-Cost Power Development Plan, which includes a 50% utility-scale renewable energy scenario. The action plans will go beyond and consider the urban and rural dimension, energy efficiency, all forms of energy and important cross-sectors.
A holistic energy vision for São Tomé and Príncipe includes the urban utility-scale and distributed small-scale perspective and the rural decentralized and off-grid dimension (e.g. mini-grids and stand-alone applications). It requires equal focus on energy efficiency in generation and distribution, lighting and appliances, buildings, industry and transport (e.g. fuel and vehicle standards, e-mobility). Since the current use of fuel wood affects the health of women, there is urgent need to consider access to efficient cooking appliances. Both plans will also look at innovative energy technologies and business models driven by industry 4.0 and digitalization.
The process begins now, the hard work starts once we have to walk the talk. Changes in the secondary legislation and the introduction of fiscal and non-fiscal policy instruments need to be enforced by all players. Practical procedures need to pass the reality-check with concrete investment projects. This will finally pave the way for project finance and privates sector participation as envisaged in the Vision 2030.
Joint editoral by:
Mr. Gabriel Makengo, National Project Coordinator, DGRNE, MOPIRNA, São Tomé and
Mr. Martin Lugmayr, Project Manager, Department of Energy, UNIDO, Vienna