New discoveries and renewables fuel growth in Côte d’Ivoire’s energy sector

Côte d’Ivoire’s robust economic growth in the years since the country regained political stability in 2011 has resulted in a surge in energy consumption, particularly in urban areas. As of 2020 the electricity sector was the third largest in Africa in terms of installed capacity, and total energy consumption increased by 14.2% between 2011 and 2020.

While the Covid-19 pandemic brought challenges for the sector, energy demand is likely to remain strong moving forwards. Ensuring that energy supply is able to keep up with this rising demand poses some significant challenges, but it also presents major opportunities as the government seeks to meet the targets set by the National Development Plan (Plan National de Développement, PND) 2021-25. These opportunities include new offshore natural gas discoveries, as well as investment in an ambitious $20bn plan to boost generation capacity by the end of the decade. Renewables will also play an increasingly important role in the energy mix. As a signatory of the UN Paris Agreement, Côte d’Ivoire has a nationally determined contribution target of 42% renewable energy generation by 2030.

However, it may face difficulties ensuring that sustainable new energy investment is rolled out across the country in an equitable way, and guaranteeing a reliable and scalable supply to industry and commerce. The impact of the Russian invasion of Ukraine on energy prices – and wider inflation – has also posed further challenges for energy companies and consumers.

Structure & Oversight

Since the government opened up Côte d’Ivoire’s power sector in 1993, a mixture of private and state-owned operators have been responsible for meeting the country’s energy needs. The private sector has become increasingly important: as of 2020, private firms were responsible for 70% of the country’s energy production and 100% of its distribution, according to the World Bank.

In April 2022 the Ministry of Mines and Geology was merged with the Ministry of Petroleum, Energy and Renewable Energy (Ministère du Pétrole, de l’Energie et des Energies Renouvelables, MPEER) to create the Ministry of Mines, Petroleum and Energy (Ministère des Mines, du Pétrole et de l’Energie, MMPE), with Mamadou Sangofowa Coulibaly appointed head of the ministry. The MMPE is the main government body responsible for energy policy, security, promotion and development. The ministry and its predecessors have supported the government as it has sought to make the development of the energy sector a national priority through the introduction of a new electricity code in 2014 and the creation of the National Electricity Regulation Authority (Autorité Nationale de Ré gulation du Secteur de l’Electricité, ANARE-CI) in 2016.

The MMPE’s policies align with the government’s broader Strategic Development Plan 2011-30 and its associated short-term five-year strategies, including the PND 2021-25. Within the Strategic Development Plan, there is an annex detailing extensive plans for conventional electricity, renewables and other new energy segments. The annex identifies 66 projects across four strategic areas: matching supply and demand for conventional electricity; sustainability in energy through the development of renewable resources; capacity building and institutional framework development; and financial viability.

The implementation of the four strategic goals is expected to cost $7.9bn. The government will take on the regulatory and enabling role, while the private sector is invited to contribute to generation, transmission and distribution. The PND 2021-25 reiterates these goals and sets some specific targets for the sector. These include boosting installed capacity from 2229 MW in 2020 to 3428 MW by 2025; increasing access to electricity; and strengthening power infrastructure to improve reliability and reach.

Electricity Policy

ANARE-CI regulates the country’s independent power producers (IPPs), which are responsible for the majority of power generation. In recent years IPPs have benefitted from strong government support, as well as funding from global organisations such as the World Bank’s International Finance Corporation (IFC), the African Development Bank (AfDB) and the French Development Agency.

IPPs operating in Côte d’Ivoire as of mid-2022 include the Compagnie Ivoirienne de Production d’Electricité (CIPREL), which began operations in 1995 and is the country’s oldest IPP. Others include Scotland’s Aggreko and Azito Energie, a subsidiary of the UK’s Globeleq and Industrial Promotion Services West Africa. IPPs supply power under a system of power purchase agreements.

Côte d’Ivoire’s IPP plants largely rely on natural gas, which made up 69.5%, or 7661 GWh, of its total electricity generation by source in 2020. The second-most prevalent energy source was hydroelectric power, which contributed 3354 GWh, or 30.5%. Other sources – such as diesel, solar and biomass – made up the remainder of the energy mix.

Investment Drive

Between 2012 and 2018 Côte d’Ivoire’s real annual GDP growth averaged 9%, according to the IMF. Though growth slowed to around 2% in 2020 due to the pandemic, projections for 2021 and 2022 forecast that the economy will be quick to rebound. As a result of this economic expansion, there has been a dramatic increase in electricity demand. At times, demand has outstripped supply: while demand for power grew at around 6% per year between 2003 and 2012, supply increased by just 2%, according to the Africa Investment Forum. This resulted in a major ramp up of investment in the electricity sector leading to 2020. According to government-owned energy company Société des Energies de Côte d’Ivoire (CI-Energies), total installed capacity increased from 1391 MW in 2011 to 2269 MW in 2021. Over the same period, electrification campaigns helped expand coverage from 34% of the population to around 94%. The government has set a goal of 99% coverage by 2035.

Côte d’Ivoire’s rapid electrification has been supported by the Social Government Programme 2019-20, which sought to improve public services in rural areas and helped add 900 villages per year to the grid. In comparison, 265 villages per year gained electricity access between 2010 and 2018.

Secure Supply

Though the country is generally able to meet its electricity needs, a series of issues in 2020 and 2021 highlighted the need for sufficient supply in the event of an emergency. In 2020 unusually low rainfall meant that hydroelectric reservoir levels were sometimes insufficient to drive turbines at optimal rates. “In early 2021 Côte d’Ivoire faced an electricity deficit of more than 200 MW due to insufficient water in the country’s hydroelectric dams, as a result of drought and breakdowns in the facilities,” Kassim Cisse, business developer at EDF Côte d’Ivoire, told OBG. These issues were made worse by the staff shortages and disruption caused by the pandemic.

In April 2021 overburdened equipment contributed to the breakdown of the Azito power plant near Abidjan. The plant, which generates around one-third of the country’s electricity, was restored in July after 45 days of energy rationing. Following the energy crisis and a change of leadership at MPEER and CI-Energies, a 100- to 200-MW floating, offshore fuel oil emergency power plant was commissioned from Turkey’s Karpowership at the start of 2022. In addition, a number of expansion programmes are under way at existing, IPP-run combined-cycle gas turbine (CCGT) plants. CIPREL is in the process of constructing an additional 111-MW gas turbine at the Atinkou power plant, which will bring its total installed capacity to 543 MW. In late 2021 local media announced that the fifth phase of the expansion plan was under way, which is set to add a new $451.4m, 390-MW CCGT at Lagunes. The plant is expected to be commissioned in 2022-23.

Meanwhile, the 453-MW Azito plant is also being expanded through a $370m, 253-MW CCGT project. The project is being financed by the IFC; the AfDB; the OPEC Fund for International Development; the German Investment Corporation; Dutch, French and Belgian state development agencies; and the West African Development Bank, reflecting the wide range of institutional investors such projects typically rely on.

Oil & Gas

Société Nationale d’Opérations Pétrolière de la Côte d’Ivoire (Petroci), the national oil company, operates as a holding company and is divided into three branches: Petroci Exploration-Production; Petroci Gaz, responsible for natural gas; and Petroci Industries-Services, which manages associated services. International oil companies such as TotalEnergies, ENI, Canadian Natural Resources and Tullow Oil also operate in the country under production-sharing contracts (PSCs) with the MMPE. While the country remains a net importer of oil and gas, recent discoveries by Petroci and international oil companies in shallow offshore waters should help to boost capacity and may pave the way for further discoveries.

The country has one oil refinery, located in Abidjan, which has an output of 3.8m tonnes per year as of mid-2021. The facility is operated by Société Ivoirienne de Raffinage (SIR), which is the largest refinery in French-speaking West Africa. Founded in 1962, SIR is majority owned by the government and a number of international oil companies. It ensures the refining of crude oil and distribution of petroleum products in the country and to the rest of the world.

In July 2021 SIR contracted US refining supplier and licensor Honeywell UOP to enable production of low-sulphur fuels that comply with Euro-5 and AFRI-6 emissions reduction standards.

Exploration & Production

The country is a net importer of crude oil, turning this into petroleum and other refined products for domestic use and export. In 2021 the IMF estimated that the country imported CFA1.7bn ($2.9m) of crude and refined products and exporting just over CFA1bn ($1.7m). The bulk of the country’s known resources are offshore, with significant fields including Espoir, Lion and Panthere off Jacqueville, and Baobab around 6 km further south. Other blocks lie closer to the Ghanaian maritime boundary. This boundary was long the subject of dispute, though this was eventually settled by the International Tribunal for the Law of the Sea in 2017.

Oil production has fallen from a high of 37,200 barrels per day (bpd) in 2019 to 35,100 bpd in 2020 and 31,600 bpd as of November 2021. The impact of the Covid-19 pandemic and historically low international oil prices in 2020-21 were partly responsible for this decline, though the ageing of oil deposits is the primary reason output has declined in recent years.

Natural gas is also found offshore in the Gulf of Guinea. Panthere also provides gas, while Foxtrot lies close to shore, off Abidjan, with the Kudu, Eland and Ibex fields closer to the Ghanaian maritime boundary. Like oil, natural gas output has also been in decline. The country’s output has fallen from around 216m cu feet per day in 2018 to 202.5m cu feet in 2019. As of 2019 the country’s proven oil and gas reserves were estimated at 100m barrels of oil and 1trn cu feet of natural gas, though a new discovery made in September 2021 could significantly increase this figure.

The country has been taking steps to strengthen its long-term supply of gas by building a new liquefied natural gas (LNG) regasification terminal, which will provide an alternative import route, and connect to local power plants and regional gas partners. The contract to build and operate the terminal was awarded in 2016 to a consortium made up of TotalEnergies, Royal Dutch Shell, Golar LNG, Endeavour Energy, the State Oil Company of the Azerbaijan Republic, and Petroci and CI-Energies. The terminal will process up to 3m tonnes of LNG per year. In August 2021 MPEER also unveiled plans to build a 200-MW LNG-fuelled power plant. Karpowership is reportedly bidding for the project, along with TotalEnergies, Aggreko and GE.

Renewables

While new oil and gas discoveries have boosted the country’s hydrocarbons sector, Côte d’Ivoire is also looking to expand its renewable energy capacity. The country aims to increase the share of renewables in its energy mix to 38% by 2026 and 42% by 2030. Along with environmental benefits, renewables are expected to be instrumental in improving energy access, particularly in remote regions. “Renewables allow for decentralised access to energy,” Cheikhou Badio, energy consultant at SAIF Côte d’Ivoire, told OBG. “They can help to quickly meet growing demand for energy in geographical areas that have been ignored in the past.”

Hydropower is a key part of the country’s sustainable energy drive. A 2016 study conducted by Renewable Energies Africa estimated Côte d’Ivoire’s untapped hydropower potential at 7000 MW, of which roughly 1847 MW could be exploited. This is a considerable increase on the country’s installed hydropower capacity, which stood at 879 MW in 2019.

Among the largest dams are the Buyo (165 MW), Taabo (210 MW) and the largest, Soubré (275 MW), located on the Sassandra River and inaugurated in July 2019. Soubré was constructed for CI-Energies by China’s Sinohydro, which is also behind another dam on the Sassandra, the estimated $345m, 112-MW Gribo-Popoli dam. The Export-Import Bank of China provided financing for both projects.

One major project currently under way is the construction of the 44-MW, $240m Singrobo Hydroelectric Power Station, which being built by Ivoire Hydro Energy on the Bandama River. It is the first facility of its kind in West Africa to be developed by an IPP. Construction commenced in 2020 and has been partly funded by international investors including the AfDB and the Emerging Africa Infrastructure Fund. It is expected to be completed in 2023. Other hydro projects currently under way include a 283-MW facility in Louga with an expected commissioning date of 2023; a 156-MW plant in Boutoubré set to be commissioned in the second half of 2022; and a 220-MW project in Tiboto with a planned commissioning date of 2028.

Many mini-hydro projects – or those below 10 MW – have also been given the green light as part of the government’s renewable energy strategy, with around 40 MW of small projects planned across 20 sites.

Solar power is also set to play an important role in efforts to ramp up Côte d’Ivoire’s renewable energy capacity. The country aims to achieve 400 MW of solar power capacity by the end of the decade — a substantial increase on its 13-MW capacity in 2020. Côte d’Ivoire joined the World Bank’s Scaling Solar programme in late 2019 to help achieve this goal, with the IFC assisting in the establishment of two solar plants with a combined capacity of 60 MW. Both facilities will be developed as IPPs.

Additionally, dam reservoirs could be set to provide locations for solar projects. In February 2022 CI-Energies launched a tender for a floating solar array on the Kossou dam. The 20-MW facility will be built close to the Kossou Hydroelectric Power Plant and will be financed through an €80m loan from the French Development Agency with the aim of supporting renewable energy expansion in Côte d’Ivoire.

Biomass

Biofuel and waste have long been the main sources of energy, with charcoal and wood fuel used for cooking – the former mostly in urban areas, the latter in rural. However, as the use of these fuels adds to greenhouse gas emissions, the government has taken steps to replace this with ‘clean cooking’. As part of the National Renewable Energy Action Plan, the government aims to provide 90% of the population with access to alternative cooking fuels by 2030. The bulk of this is expected to be liquefied petroleum gas.

Outlook

As the country returns to robust economic growth and its population expands, electricity demand is set to rise. At the same time, new offshore discoveries promise a brighter future for the country’s hydrocarbons sector, while the renewables segment will be instrumental in helping the country achieve its clean energy goals and improving access in remote areas. Amid this backdrop, demand for projects across the sector looks set to continue at a steady pace.