The electricity sector in Somaliland currently boasts a total generation capacity of 165 MW. The price of electricity is set at 0.73 USD per kilowatt-hour (kWh). This high cost reduces energy consumption among households and light industries, as many residents and businesses struggle to afford such rates. To cope with these challenges, many light industries have resorted to operating their diesel generators. However, the high operational costs associated with these generators often lead to limited usage, further hindering productivity and growth. Experts believe that if Somaliland could access more affordable electricity, the overall energy demand could surge to over 450 MW.
This surge would signify a tremendous potential for increased consumption and economic expansion. Currently, the primary source of electricity generation in Somaliland is light diesel oil, which constitutes the overwhelming majority of the energy mix. This heavy reliance on fossil fuels poses significant risks, particularly in light of global climate change initiatives and the volatility of oil prices. Alarmingly, renewable energy sources, particularly solar energy, account for less than 5% of the total power generated in the region. This stark contrast underscores the pressing need for substantial investment programs aimed at developing diverse renewable energy technologies, including solar panels, wind turbines, and biofuels.
Moreover, there is a viable opportunity to explore hydropower projects in collaboration with neighboring Ethiopia, which could provide an additional layer of energy diversification and stability to Somaliland’s electricity supply. Over the past 15 years, Somaliland has witnessed remarkable growth within its medium and light industries, significantly contributing to the country’s economic development. A burgeoning focus on heavy industries is becoming increasingly evident, with several key infrastructure projects currently underway.
These projects include a new cement factory, which aims to bolster the local manufacturing capabilities and reduce import dependency, a fish processing factory to enhance the fishing sector and support local fishermen, and an oil storage depot designed to improve fuel supply stability and management. Additionally, significant infrastructural developments are taking place at Berbera Airport and DP World Port, which are expected to facilitate international trade and transportation.
These advancements will further promote economic connectivity and growth in the region. In light of these developments, the newly elected government must prioritize advancing the energy sector. The current energy sector policy remains weak and lacks the necessary framework for effective electricity regulation. Additionally,
the existing tariff structure is inadequate, failing to address the financial burdens faced by the population. As Somaliland grapples with high inflation and steep electricity costs, decisive action must be taken to reform the energy landscape, ensuring that electricity is both affordable and accessible for all citizens while also fostering an environment conducive to sustainable economic growth.
The electricity sector in Somaliland is at a crucial juncture, with high costs and limited renewable energy adoption hindering economic growth and development. Here’s a detailed breakdown of the challenges and potential solutions for transforming
Somaliland’s energy sector:
1. Diversify Energy Sources:
●Somaliland has abundant solar irradiation and wind resources. Partnerships with international investors can fund large-scale projects, reducing costs and boosting generation capacity.
●Explore biofuel initiatives to leverage agricultural by-products, support rural economies and offer an alternative energy source.
2. Cross-Border Collaboration for Hydropower:
Partner with Ethiopia to develop hydropower projects, tapping into Ethiopia’s established infrastructure.
This collaboration could stabilize the energy supply and reduce dependency on diesel.
3.Energy Policy Reform:
Implement a comprehensive energy policy focusing on: Regulation of Electricity Tariffs to make electricity affordable.
Incentives for Renewable Energy investments.
Transparency and Accountability in the energy sector.
4.Infrastructure Investments:
Develop modern grids to integrate renewable sources and improve efficiency.
To reestablish an Energy Regulatory Authority to oversee pricing, licensing, and investment frameworks.
Conclusion By prioritizing the development of affordable, diversified, and sustainable energy sources, Somaliland can significantly drive industrial growth, improve living standards for its citizens, and secure a more stable economic future.
To achieve this, a comprehensive strategy that combines crucial elements such as policy reform, substantial investment in renewable energy projects, and the enhancement of existing infrastructure is essential.
Implementing effective policy reforms will lay the groundwork for a more efficient and transparent energy market, attracting both local and foreign investment.
This investment can facilitate the deployment of renewable energy technologies, such as solar, wind, and biomass, reducing dependency on fossil fuels and lowering energy costs.
Furthermore, addressing the infrastructure challenges in the energy sector is vital.
Upgrading the electric grid, expanding access to electricity in rural areas, and establishing reliable distribution networks will ensure that energy resources are utilised effectively and reach all population segments. In this context, the newly elected government should play a crucial role. It must take decisive and strategic action to implement these policy changes and prioritize the electricity sector, thus unlocking the immense potential of Somaliland’s energy landscape and paving the way for sustainable development across the nation.
ENG.ABDI ALI BARKHAD
Independent Political Analyst
Tra50526@gmail.com
8/12/2024