Cameroon is a politically stable sub-Saharan African country that has seen an average annual economic growth rate of 3.7% over the last decade. Its political stability stems from its powerful government, which is the main actor in all major power generation projects. Nevertheless, the energy sector was one of the first in Africa opened to privatisation and in 2015 it further unbundled with the creation of a national transmission and system operation company. However, the legal framework governing the electricity sector now needs significant review, which will likely take until 2018.
The country has a relatively high electrification rate of 62% nationally and over 95% of urban households are electrified. The government aims to increase electrification to 75% nationally by 2030, reaching 3GW of overall power capacity by 2020 in the process.
Cameroon has the third largest hydropower potential on the continent (20GW) of which 732 MW has been developed, accounting for 58% of power generation. Thermal capacity accounts for the rest, including a 216MW gas power plant. Other renewable sources, including hydro < 5MW, are very limited, though the government as part of its intended nationally determined contribution (INDC) has committed to 25% electricity generation from such sources by 2035.
This target is likely to be transcribed into law in the renewable energy law that is being drafted. The law will also likely mandate an auction or tendering process be implemented by the government, as well as set renewable electricity purchase tariffs and clarify the rules around purchase of renewable electricity. Currently, grid operators are obliged to buy excess production from renewable energy installations, though no price is specified and grid operators are also not allowed to buy electricity at above-market rates, causing conflict and rendering the policy ineffective. Consequently, the only effective support measure is that renewable energy equipment benefits from VAT exemptions.
Cameroon was one of the first countries in Africa to open the energy sector to private investment. The Electricity Law of 1998 resulted in the entry of AES as a majority shareholder of Sonel, the national utility, in 2001. The company obtained a 20-year transmission and distribution concession and owns most of the existing generation capacity. In 2014 it was acquired by Actis, the private equity fund, and rebranded as Eneo. The law also made possible the involvement of independent power producers. Two are currently active and operate the country’s two main thermal power plants: the gas plant at Kribi and the fuel oil plant at Dibamba.
A new phase of reform in the power sector started in 2011, with the promulgation of a new Electricity Law which paves the way for unbundling generation, transmission and distribution. A December 2015 decree split out the transmission and system operation components of Eneo to create the state-owned SONATREL. This is premature as the legislation governing this arrangement likely needs 1-2 years of development. It appears SONATREL will likely be system operator, decide dispatch, and likely be single buyer for all grid-connected wholesale power generation.
Also under the law, a number of agencies were created in 2013, including the Rural Electrification Agency (AER) and the Electric Sector Regulation Agency (ARSEL) which sets electricity tariffs. The Electricity Development Corporation (EDC), was created in 2006 with the mandate to develop, own and operate hydro storage (but not power generation) assets.
The 2011 law also opened the door to independent power generators and distributors in rural areas outside the concession of Eneo, but only one independent power generation and distribution license has been awarded: to GFDEE, a small company running a 0.6MW thermal power plant in Yoyo and serving about 160 customers. However, this project was developed outside of the regulator’s awareness together with the local population and ex-post granted an official concession. The long term Energy Sector Development Plan and the Rural Electrification Master Plan have the goal to electrify 660 localities through grid extension and the development of mini-grids.
Cameroon scored 1.13 in Climatescope 2016, ranking it 36th on the list of countries overall, an increase of thirteen places. Most of the momentum for this increase came from a vastly improved performance on Enabling Framework Parameter I.
The country leapt thirty-one places up the order on Parameter I to rank 16th. Its score benefited from a range of improvements in the Policy and Regulation category, including lower tax rates on solar equipment and measures to strengthen the framework governing distributed energy.
On Clean Energy Investment and Climate Financing Parameter II, the country remained weak. It attracted no new investment and continues to endure a high average cost of debt. It was placed 47th, one spot down from the previous year.
Cameroon substantially increased its score on Low-Carbon Business & Clean Energy Value Chains Parameter III because of, among other things, a growing number of financial institutions operating in the clean energy sector. It climbed seven places to 42nd.
On Greenhouse Gas Management Activities Parameter IV, the country sank one place to 38th overall. However, its score rose thanks to modest progress in the area of corporate awareness and the introduction of an emissions reduction target.
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