Cameroon invites bids for its 500 MW hydro project

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Cameroon is seeking contractors for its 500 MW Kikot-Mbébé hydropower project, its second such project developed through a public-private partnership. The partners are France’s multinational electric utility company EDF and the Government of Cameroon through the Kikot-Mbébé Hydro Power Company. 

• Cameroon signed its first major hydropower PPP in 2018 for the 420 MW Nachtigal hydropower dam. Construction is ongoing and expected to be completed by the end of 2025, making it currently the largest ongoing public-private partnership project in Sub-Saharan Africa's energy sector.

• The Kikot-Mbébé hydropower project will be built over four years at a cost of $1 billion, with financial support anticipated from partners such as the World Bank, the International Finance Corporation (IFC), and other development agencies. The project is part of Cameroon's broader vision of providing low-cost, renewable electricity generation, as outlined in its National Development Strategy 2020-2030.

More details

• Hydropower plays a crucial role in Africa's energy mix, with 41 of 54 African countries utilising hydropower plants. In 2022, hydropower generation on the continent accounted for 75% of all renewable electricity and 17% of total power generation. Several countries rely heavily on hydropower for their electricity needs, with the Democratic Republic of Congo, Lesotho, Central African Republic, Ethiopia, Uganda, and Sierra Leone deriving 90% or more of their electricity from this source. 

• However, Africa has installed only about 10% of the continent's total hydropower potential. With the current demand for renewables, a significant opportunity exists for growth in the African hydropower sector. The continent needs to expand its electricity supply by 50% by 2030 and four times higher by 2050 to meet growing demand.

• While solar and wind power are important components of the renewable energy mix, they cannot fully meet the growing baseload demand—the consistent minimum power required around the clock. Battery energy storage systems can complement these intermittent sources, but their widespread adoption is currently limited by high costs, although there is much more potential for battery storage as prices decline. 

• Hydropower technology is more mature and efficient, averaging 90% efficiency compared to solar's below 25%. However, hydropower projects also have downsides, such as the displacement of communities and construction timelines that can be lengthy due to weather challenges and the complexities of compensating affected populations.

• Over the last few years, we have seen a resurgence of interest in hydropower dams. The Democratic Republic of Congo plans to construct the Grand Inga Dam, with a planned capacity of 40 GW, which would make it the largest hydropower plant in the world. Tanzania is nearing completion of its 2,115 MW Julius Nyerere Hydropower Plant. Mozambique plans to build the 1,500 MW Mphanda Nkuwa Dam, and Kenya has plans for the 1,000 MW High Grand Falls Dam.  

• The hydropower market is gaining momentum and projections by the International Hydropower Association estimate that hydropower capacity in Africa could exceed 100 GW by 2030. Ethiopia is one of the latest mega hydro projects to come online. At 5.1 GW it's currently the largest hydro project in Africa.

• Hydropower projects have, however, struggled to attract financing. Ethiopia built its Grand Renaissance Dam with domestic resources due to difficulties in securing international funding.  Egypt is readvertising its 2.1GW Ataka Mountain pumped hydro project after the initially selected developer, China’s state-owned Sinohydro, was unable to secure financing.

Our take

• The increasing demand for renewables, particularly solar and wind, requires more baseload power to balance their intermittency. Hydropower, with its stable and reliable generation, is a perfect option for providing this baseload power. However, climate change threatens its reliability, as witnessed last year in Zambia, where droughts affected water levels and electricity generation.

• A combination of hydropower and solar panels, especially when integrated into existing hydro dams, offers numerous benefits. The water reduces evaporation and provides cooling for solar panels, enabling them to work more efficiently. This hybridisation between stable and intermittent renewable energy sources offers a promising solution for enhanced grid stability.

• Securing financing, though, remains a significant challenge for such mega-hydropower projects. Public-private partnerships offer potential solutions in such cases. Governments need to create attractive policies to encourage private sector investment in such projects. These policies could include tax incentives, streamlined permitting processes, power purchase agreements, and risk mitigation mechanisms to ensure the long-term viability and success of these crucial energy projects.projects.