When It Comes to Renewable Energy in Emerging Markets, It’s All About the Basics

Joseph Dana

AFP photo: Florean Plaucheur

As the technology improves and prices fall for renewable energy, more countries in emerging markets are hoping to go green. China and the United States, in particular, are vying for influence in these markets. But both miscalculate what is needed. This gap in understanding reveals just how challenging the transition to renewable energy will be. For in fact, the path to widespread adoption of green energy in developing countries lies as much in upgrades to – and the not-very-sexy matter of – transmission infrastructure, which has long been overlooked, as it does in sustainable power generation.

China is leading the push into renewable energy in the Middle East and Africa with a flurry of partnerships and ventures with key players in the clean-energy sector. The state-owned China Three Gorges Corporation, for example, recently acquired Dubai-based wind and solar developer Alcazar Energy Partners. The deal, estimated to be worth $500 million, will give China a significant foothold in the Middle East clean-energy sector.

Indeed, China rightly senses that there is a good deal of money to be made from developing countries’ hunger for green-energy innovation. Consider China’s recent partnership with Egypt’s El Nasr Automotive Manufacturing Company to test Chinese-made electric vehicles. El Nasr is importing electric cars from China’s Dongfeng Motor Corporation to kickstart a joint venture that will eventually see Dongfeng’s vehicles assembled in Egypt. For now, it’s a small program involving testing cars in cooperation with Uber. But given that Egypt is the second-largest car market in the Middle East, after Saudi Arabia, it is understandable why Dongfeng would be interested.

There is, however, one caveat. Anyone who knows anything about Egypt will wonder how a fleet of privately-owned electric cars, not just those from Dongfeng and not just those supplied to Uber, will be juiced up. Charging stations all over Cairo? Hard to imagine. But hold on, there’s more to this.

For its part, the US government is exiting support for carbon-intensive energy infrastructure projects worldwide. Earlier this year, the Biden administration decided to draw down American funding for carbon-intensive initiatives. Joe Biden’s secretary of state, Antony Blinken, told the US Development Finance Corporation that limiting aid to high-carbon-energy infrastructure projects would be a powerful means of addressing the climate crisis and would help drive investment toward climate solutions.

On the surface, this sounds prudent. Who could disagree? On deeper reflection, however, the emphasis on high-tech generation also means neglect in investment for more prosaic elements of the energy-supply matrix.

That issue is the transmission and distribution infrastructure. Take Africa. Generally, the continent lacks a robust and extensive grid system. It is one thing to say that there will be an emphasis on the green-generation side, but what about how to distribute the power that is produced? Reports put the number of people lacking access to electricity on the continent at as high as 600 million. That’s more than the population of North and Central America together.

Both the American and Chinese approaches reveal a lack of understanding of what markets need to go green. Taking stakes in major clean-energy projects and testing electric vehicles on the streets of Cairo sounds terrific, but neither will kickstart a green-energy revolution if power can’t be transmitted across individual countries. Indeed, how will charging stations for electric cars even get their power? And frankly, without a concomitant dedication to building transmission and distribution networks, plans for green-electric generation will be stillborn.

Worse, it threatens to aggravate the developed-developing world divide. In the West and Asia, governments and industry are rushing to build out green-power generation while mandating electrification of cars in 20-30 years. Places like Africa, however, will continue to be dependent on the internal combustion engine well beyond 2050. And as leading car manufacturers in Asia, Europe and North America pivot increasingly toward electric vehicles, that means the average age of fossil-fuel powered cars in Africa will eventually rise. Notably, older cars are more polluting.

The developing world, and especially Africa, needs basic infrastructure in the form of better electric grid systems, in addition to high-tech green-power generation. For the very foundation of the power grid is damaged in many countries, which means renewable energy projects will never get going at scale. For if South Africa, the continent’s most industrialized nation, struggles with the basics of power infrastructure, imagine the situation in Chad or Mali. Thus, if the US and China are serious about renewable energy – for both anti-climate-change and commercial reasons – they must start by building the basics of the electricity infrastructure.

With population numbers in emerging markets set to explode over the coming decades and the risk of climate-related disasters on the rise, time is running out. Failing to fully address the needs of the Global South will erode any gains made in the developed North. The leading economies of the world should see their interest mirrored in that of poorer nations.

Joseph Dana is the senior editor of Exponential View, a weekly newsletter about technology and its impact on society. He was formerly the editor-in-chief of emerge85, a lab exploring change in emerging markets and its global impact.