Policy Research Reports
The Role of MSMEs in Fostering Inclusive and Equitable Sustainable Economic Development Within the Context of the Clean Energy Transition in the MENA Region: Sudan Case Study Report
No.
PRR 52
Publisher
ERF
Date
December, 2024
Summary
The prospects for the post-conflict adoption of renewable energy in Sudan depend on various factors, including political and economic stability, long-term development plans, external support, and political commitments. While the growth of renewable energy in Sudan has not kept up with similar countries in the region, the variety of uses and renewable energy potential in Sudan is well documented. However, the literature on the role of renewable energy for post-conflict recovery remains scarce. Sudan has historically had low access to electricity with persistent regional inequalities in grid coverage. Sudan’s installed capacity is split between thermal and hydropower generation, which feed into a grid that is mostly concentrated and provides electricity to the central part of the country along the Nile. Several regulations have been introduced since 2001 to incentivize private sector participation in the power sector, first through amendments in 2013 to the Electricity Act 2001 to unbundle the sector then through various investment and public-private partnership legislations in 2015 and 2021. Despite these efforts, investment in the power sector remains low. Moreover, the residential sector accounts for the highest percentage of electricity consumption and is the only sector to show an increase in consumption between 2011 and 2021. This is symptomatic of the low share of industry in total GDP and the decrease in industrial output since 2011.
To investigate the potential for renewable energy to support the energy transition, particularly for micro, small and medium enterprises (MSMEs), this project uses a multimethod approach of focus groups with owners of enterprises and key expert interviews with various stakeholders and experts. Owners of MSMEs highlighted the benefits of renewable energy in ameliorating the impacts of fuel price volatility and supply chain disruptions on enterprise operations. The findings also show that the impact of renewable energy varies across sectors and size of enterprises. Renewable energy shields agricultural enterprises from fuel price volatility and enterprises operating in urban areas benefit from consistent supply of electricity for lighting and cooling. In the mining sector, however, renewable energy has thus far been confined to low-voltage solutions, such as lighting and business support services. In general, owners of enterprises see the benefit of switching to renewable energy. Experts in the field spoke at length about the reasons behind the low investment in the power sector, mainly pointing out that this is due to several structural and institutional factors. First, the high cost of finance and lack of investment appetite is partially due to perceived high risks by investors and financial institutions. Second, the complexity of the regulatory framework and lack of transparency in licensing and project approval processes have deterred investment. Third, particularly for decentralized renewable energy development, there are no clear regulations that allow for power purchasing agreements between the government and power producers. There are several policy implications of these findings: first, a broad, long-term development strategy that incorporates energy security and sovereignty as a guiding principle; a comprehensive regulatory framework to reduce the costs of investment in the sector; mechanisms to ensure energy affordability; and cheap finance and awareness campaigns to increase renewable energy adoption among MSMEs.
Speakers
Muez Ali
Research and Policy Lead at Earthna, Center...
Authors
Mayada Hassanain
Researcher, International Economics Development Associates (IDEAS)
Authors
Alzaki Alhelo
PhD, Tufts University