Tax incentives put Cameroon on the road to solar power

Yaounde — Before the University of Yaounde 1 got its solar micro-grid in 2018, erratic power supplies in Cameroon’s capital meant Adamu Gilbert could not stock the fresh, chilled items he knew his customers wanted when they came to his shop near campus.

Now that he has reliable electricity from the micro-grid, which serves the university and surrounding small-scale businesses, he has a refrigerator filled with cold drinks, fruits and yoghurts  and business is booming.

“With sales from these perishables that are really loved by students, I make double the amount I used to,” Gilbert told the Thomson Reuters Foundation.

With more than half of its electricity generated by hydropower, Cameroon should be a poster child for renewable energy use.

But in recent years, erratic rainfall and prolonged droughts linked to climate change have hit the county's hydroelectric dams, leading to blackouts and power rationing that almost daily plunge parts of the country into darkness.

To try to solve the problem, Cameroon is looking to solar power, introducing significant tax cuts to attract funding for projects that could grow and stabilise the country's energy grid while lowering carbon emissions.

Among the incentives, which went into effect late last year, are a 10-year elimination of several taxes, including stamp duty, on equipment used to build renewable energy projects. The country earlier reduced customs duties on imported renewable products.

The idea is to bring a stable power supply to more Cameroonians, especially in rural areas, Pierre Narcisse Massoma Bille, director of renewable energy at the ministry of water & energy, told the Thomson Reuters Foundation.

“The incentives will not only help the country meet its development challenges, but also help in the fight against climate change,” he said.

Some industry experts applaud the move, saying it could prove a model for other African countries looking to tap their solar potential.

But others warn that if Cameroon's green energy sector grows too big and too fast, corruption and a lack of local technical expertise could dim its solar ambitions.

Drying hydropower

Over the past decade, Cameroon’s power supply has been hobbled by increasingly unreliable rain, droughts and by outdated, dilapidated infrastructure.

According to the World Bank, about 60% of the country's population has access to electricity, with most of that concentrated in urban areas. Rural electrification is just 25%.

Cameroon wants to electrify more of the country and increase its grid capacity from 1,500MW to 5,000MW by 2030.

It also wants to reduce its dependence on hydropower by getting a quarter of its electricity supply from other renewable sources by 2035, up from just 6% today, according to government figures.

Massoma Bille said the government has no target or estimate for how much investment the tax changes could bring in, but it expects the response to be “positive”.

For the charities and companies already backing solar projects in Cameroon, the incentives are a chance to amplify reach and increase profits.

Eugene Ngueha, technical director of Energy of Cameroon, the country’s main electricity supplier, said the partially state-owned company is already taking advantage of the tax cuts to construct two solar power plants in Maroua and Guider, in the country's electricity-hungry north.

The French Facility for Global Environment, a public bilateral fund, also took advantage of the incentives as it installed photovoltaic systems in five towns, all run by women.

Rose Ngassa, head of the rural council in Tombel, one of the towns, said the new micro-grids mean people now can run businesses such as restaurants and bars at night, something impossible with the former persistent power outages.

“Solar power is sure and certain,” Ngassa said. “Many will embrace small-scale activities they were scared of doing before.”

The tax cuts also should make it easier for major international players to expand their solar investments, said Edmonde Djiokeng Teboh, a spokesperson for technology firm Huawei, one of several Chinese companies putting money into Cameroon’s renewables sector.

“All over Africa, investors are now taking renewable energy very seriously,” she said.

Roadblocks?

But the incentives will only work if the government commits to stamping out corruption to ensure investors do not end up spending as much in bribes as they would have paid in taxes, said Zachee Nzohngandembou, head of the Centre for Environment and Rural Transformation, a non-profit based in Limbe.

“It’s a good move, provided there is a strict follow-up for implementation in the field. Sometimes the law says one thing and implementation is another,” he said.

Taku Alain, CEO of renewable energy firm TakuEnergy, warned that Cameroon’s solar efforts also could hit a snag when it comes to finding enough trained engineers to maintain the equipment for a raft of new solar energy projects.

Cameroon is already attracting more investment in renewables than many other African countries, said Augustine Njamnshi, co-ordinator of the Africa Coalition for Sustainable Energy and Access, an alliance of green energy organisations.

Drawn by the country’s ambitious climate goals — such as cutting its carbon emissions by a third by 2030 — investors see room for growth in its solar sector, especially as green technology becomes more affordable, Njamnshi said.

“Africa, with its abundant sunshine, has great solar energy potential,” he said.

“Cameroon will reap the benefits ... the country has the potential to drive its economy forward in the years ahead.”

Thomson Reuters Foundation

ELIAS NTUNGWE NGALAME | https://www.businesslive.co.za/