Hargeisa — A wind turbine, situated some 20 kilometres outside of Somaliland's capital Hargeisa, has become a significant totem of the country's changing energy landscape.
The breakaway semi-autonomous region that was once part of Somalia has struggled to develop its economy despite dilapidated energy infrastructure that makes it almost impossible for businesses to function.
But later this year, Somaliland's first Electricity Energy Act will be launched. It will be the country's first legal and regulatory framework aimed at managing energy production and distribution, with a focus on piloting alternative energy solutions, including wind farms in four major cities.
"Businesses have been unable to operate to their full potential as there is no regular or reliable supply of electricity in Somaliland. This is slowing economic activity and development in the region. We need to look at alternative and renewable sources of energy to reverse this trend," Minister of Mining, Energy and Water Resources Hussein Abdi Dualeh told IPS.
Somaliland has one of the world's highest electricity rates. While the rest of the world pays an average 15 to 30 cents per kilowatt hour, Hargeisa's residents pay one dollar per kWh. High energy prices and a lack of an energy policy framework have blocked competition and stifled investment in the region's private energy sector. Investors have little confidence in any long-term financial return due to limited regulation.
Local businessmen frequently complain that high energy bills are causing fewer products to be produced in Somaliland, giving foreign imports an unfair competitive advantage.
"When so much of our income is spent on electricity bills, we lose our ability to compete with foreign imports in the local market," Faisil Wadani, the owner of a small factory, told IPS.
The streets of Hargeisa are densely populated with kiosks and vendors who pay independent power providers approximately 10 dollars a month to run a single 100-watt light bulb. For the majority of these small kiosks their improvised lighting system has no switch and the bulb is likely to burn all day and night unless unscrewed.
After the collapse of Somalia in 1991, the new Somaliland government retrieved wires, poles and generators from the bombed debris in Hargeisa to try and assemble a functional, albeit crude, infrastructure for generating electricity for its citizens.
Independent power providers quickly began to appear when it became apparent that the government had no funds to invest in the power grid. This rapidly gave rise to an unregulated system that has endured since 1991.
Somaliland's antiquated electricity infrastructure is now run by a decentralised network of local power providers in Hargeisa, which involves neighbours paying neighbours for electricity.
The lack of government support for power creation has compelled many of Hargeisa's wealthier residents to import diesel generators from the Middle East to power their homes and businesses. The majority of Hargeisa's power is now generated by diesel generators and transmitted through the capital city's hazardous electricity network.
A disorganised supply of electricity in the hands of independent power providers makes consumers vulnerable to high costs and erratic power access, said Dualeh.
"The government manages only 20 percent of the electricity market while independent providers are responsible for the majority of Somaliland's electricity. Somaliland rates are very high due to this spaghetti network of independent power providers where each has their own grid using outdated equipment," he said.
According to the government, 40 percent of electricity is lost due to the poor electric infrastructure used to generate and distribute energy.
To help Somaliland draft its first Electricity Energy Act, the United States Development Agency (USAID) has been working closely with the Ministry of Mining, Energy and Water Resources, local power providers and consumers to expedite the process of creating a more regulated electricity supply.
This has created a mood of confidence among the business community that they will soon be able to be open for business for longer periods of time without interruption from frequent power cuts.
"A supply of affordable electricity without frequent daily interruption will increase my business activity and make my job less of a daily fight for financial survival," said Wadani.
The Electricity Energy Act is expected to standardise the sector's infrastructure and establish safety standards by building on the existing electric grid infrastructure in Hargeisa.
"We cannot guarantee that the new electricity law will reduce costs but we can expect the supply of electricity to be more efficient. It is more often than not to do with inefficiency that electricity rates are so high in Somaliland," Suleiman Mohamed, head of USAID partnership programme, told IPS.
But Dualeh said that the new electricity regulations "will support more efficient distribution, enhanced safety in the sector and higher levels of investment from the private sector, as they will have greater confidence in the energy market."
Wind power in Somaliland is also rapidly emerging as a promising alternative source of energy. The government has realised that the potential for renewable sources of energy should be exploited to help revitalise the region's power supply and provide a cost-effective alternative.
"We must seriously look at sources of renewable energy such as solar and wind power, especially when Somaliland has over 340 days of sun and some of the fastest wind in the world," says Dualeh.
To confront Somaliland's ongoing energy crisis, with the support of USAID the Ministry of Mining, Energy and Water Resources has erected five turbines worth over 350,000 dollars on a wind farm pilot project near the Hargeisa International Airport. Wind data stations have also been installed across the country, to offer investors information about wind power potential.
Somaliland's independent power providers are also learning about the economic benefits of generating renewable energy.
The Abaarso Tech Secondary School in Hargeisa had a wind turbine in their storage room for nearly three years before finally setting it up in January 2012. Once fully operational, the 20 kW turbine provided enough electricity to run the high school. The city government subsequently came up with an income-generating plan for the school to sell the surplus electricity it generated to neighbouring villagers.
In the long term, harnessing alternative energy solutions such as wind power should have higher returns for consumers and providers than using diesel would.
"We just spent 240,000 dollars on new diesel generators. After seeing the projected returns for wind energy, I wish we could have spent that money on wind turbines and saved on diesel costs. Diesel is the past, wind is the future," Yusuf Aaaden, a local Hargeisa independent power producer, told IPS.