Worldwide: Chinese Electricity Strategy And Its Application In Africa

Last Updated: 4 September 2015
Article by Kenny Chiu and Wil Huang

Most Popular Article in South Africa, September 2015

It is common knowledge that electricity is a main driver of the economy and a country's electricity strategy will largely determine the long-term sustainability of an economy. The relationship between the Chinese economic miracle and the science behind the development of its electricity strategy is inseparable. Africa, as the centrepiece of development in the world, will require a practical strategy for electricity in order to guarantee the stable development of its economies. On this front, there is much that Africa can learn from the Chinese electricity strategy.

Similarities between the development of the economy in China and in Africa

There are many similarities between the development of the Chinese and many African economies. They are at similar levels when it comes to the improvement of people's livelihood, attentiveness to social improvement and the willingness to develop democracy. They are also rich in resources, have high populations, vast areas of land and are well-positioned in the region. China is a socialist country, and even though many African countries are capital markets in general, they all have some level of social characteristics. Finally, both China and Africa face the tough task of developing their economies. These similarities between China and Africa suggest that the Chinese electricity approach can also be applied to Africa. 

Africa can learn from the successes of the Chinese electricity strategy

The speedy rise of the Chinese economy over the past 30 years is testament to its electricity strategy, which has also contributed to the healthy development of its economy. ENSafrica's China Practice Group has increasingly advised many Chinese companies in the energy industry.

The main successes of the Chinese electricity strategy are:

  • Full utilisation of local resources to guarantee electricity supply. One of China's main advantages is that it has vast tracts of land with many different resources. For example, China has a lot of high-quality coal reserves and rich water resources. These are good starter criteria for the development of the Chinese energy sector. Similarly, Africa should fully utilise its natural resources. In some parts of Africa, there is an abundance of water, such as the Nile River, the Congo River and other large rivers, which all have huge potential for hydroelectric energy. Therefore, this geographical advantage must be considered with the new technology available and used efficiently.
  • The full use of technology and the development of renewable energy to guarantee electricity supply. Faced with new situations and new developmental criteria, traditional energy generation can no longer satisfy basic demands. A key element that makes the Chinese electricity strategy a success is the full use of technology and renewable energy production, providing high-quality and high-efficiency clean energy, such as harnessing solar power, wind power, swamp gas, nuclear and other energy sources. Africa must follow suit and emphasise the development of power generation technology and the use of renewable energy. The use of advanced technology, coupled with the development of the economy, will ensure a continuous supply of electricity. This is not only a characteristic of the Chinese electricity strategy but also the path of future power generation development.
  • Revolution of the grid system. One of the most important strategies for China is the revolutionary upgrade of the grid. As the country comes to terms with the growing energy sector, it must simultaneously deal with problems such as monopolies, electricity transmission, power distribution, electricity usage and achieving efficiency in respect of electricity transmission. It is important for African countries to take note of these factors when developing their own grid system, especially at an early stage. While ensuring competition, the management of efficient suppliers must also serve the needs of economic development. 
  • The development of the electricity strategy and the economy must be in unison. The Chinese electricity strategy is subject to the development of the economy. The centralisation of economic activity requires that fast-developing areas and, in particular the provinces along the Chinese eastern seaboard, get special preference. Thereafter, the strategy is shifted to use the generation capacity of the eastern seaboard to produce electricity for the developing western areas of China. Coal supplies from the north are also shifted to satisfy the economic development and power distribution of different areas. This ensures the efficient use of energy resources. Likewise, Africa has wide open spaces and, in formulating a correct electricity strategy, not every region can be satisfied equally at the same time.

By learning from the Chinese electricity strategy, Africa must produce practical solutions relevant to it and not simply produce a copy-and-paste solution. This requires scientific research before an effective electricity strategy can be formulated.

As there are a number of countries in Africa, adopting the same strategy for the whole continent will not be realistic. As such, the differences between countries must be respected and negotiations may be under the auspices of the African Union. This would allow sufficient synergy and mutual development of the strategies for each country, as well as lower costs and raise efficiency.

As African countries are largely underdeveloped, have weak economic foundations and high demand for electricity, coupled with a lack of technology and finances for large-scale power generation, assistance can be acquired from international financial institutions such as the likes of the World Bank and the BRICS Bank. These institutions could offer finances at low interest to provide financial support for these projects. Institutions such as the BRICS Bank could also establish specialised banks in various regions in Africa, similar to the strategic Chinese banks established to provide specialised finance and to break the financial bottleneck associated with energy development.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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