After reading Connor Edinger’s blog post on the world’s largest buyout firm Blackstone, the uncommon topic of electricity in African appears to on the agenda of the firm.

In Connor’s blog he made it clear that there is a fantastic opportunity for Blackstone to invest in the building of new hydro and geothermal energy sources. I agree with him that by building these energy sources, Blackstone will tap into the sixty percent of Africans who are currently unable to access electricity. Newly developed sources of electricity could cause a massive influx of the number of people using electricity thus proving an intelligent investment for Blackstone.

However, Connor states that electricity has a very inelastic demand which would result in a large payout for the firm. I do not agree with this statement. In North America people can afford electricity as it is relatively cheap and people have become so dependent on it that it is indeed an inelastic good. In Africa on the other hand, if the price of electricity were to go up, there is a greater chance that many people would no longer use it as they have to use the little money they have on necessities.

If Blackstone is to find success in the African power industry they must go about their costs carefully as to not interfere with, in many cases, a fragile income.