Africa faces a two-fold challenge; rising energy poverty while western economies are increasingly restricting investment in Africa’s plentiful hydrocarbon resources. With over 600 million people lacking access to electricity, reliance on hydrocarbons for much of the continent’s power generation, as well as increasing climate change impacts experienced across the continent, Africa requires significant investment and the rapid development of its power sector in 2022 if it is to alleviate energy poverty once and for all.
The energy transition, therefore, has not only paved the way for LNG to act as a bridging fuel, but also for enhanced renewable energy developments in Africa. Have these developments enabled the continent to leapfrog somewhat, towards an energy secure future through the adoption of decentralized renewable energy systems in addition to centralized grids, improved renewable energy capital channels, and the mobilization of the private sector?
As global pressures mount to transition to cleaner energy sources, Africa could, in fact, be a leading market in this regard, largely due to the continent’s significant renewable energy resource base, high demand for energy, and unique opportunities for decentralized energy systems. Unlike developed nations, African countries have not had the luxury of mature energy infrastructure systems to help drive economic development. With much of the continent living in sparse, rural communities, centralized energy systems have not only been expensive, but largely unattainable in Africa.
Now, on the back of the energy transition, and with the declining costs of renewable energy technologies and availability of new technologies such as battery storage systems, Africa is significantly improving its electrification, and thus, leapfrogging towards a sustainable and secure energy future. Notably, Nigeria, through the Solar Power Naija Program, aims to provide electricity through solar generation to over 25 million people across the country’s six geopolitical zones. By establishing decentralized solar systems, the government aims to address energy poverty through decentralized renewable mobilization.
Meanwhile, with global investors and energy majors looking towards renewable investments, African markets stand to benefit. Financiers and energy companies worldwide have pledged to abandon hydrocarbons funding, targeting net zero emissions and redirecting capital towards Africa’s green energy landscape. Accordingly, clean capital has emerged as a key driver of Africa’s power generation sector. For example, international and regional institutions such as the World Bank and the African Development Bank, as well as sub-regional African banks including Nedbank, and ABSA have reaffirmed their commitment to financing Africa’s energy transition, and subsequently, the continent’s renewable energy sector.
Meanwhile, TotalEnergies, one of the world’s supermajor energy companies, has unleashed an ambitious renewable energy program across Africa. The company is not only targeting the development and investment of renewable energy across key markets in Africa – including Libya, Mozambique and Rwanda – but is pursuing the uptake of resources such as solar at its key oil and gas projects. Accordingly, as financing for renewable projects increases, Africa’s power generation sector is seeing significant expansion.
What’s more, one of the primary ways the continent is managing to leapfrog to a secure energy future is through the mobilization of the private sector. Recognizing the role the private sector plays in securing investment and driving the development of the power sector, countries such as South Africa, Kenya, Morocco, and Egypt have been highly effective in driving energy sector growth. By pursuing public-private partnerships, African countries can integrate the public sector’s access to large quantities of capital with the private sector’s expertise and know-how, thus accelerating power developments.
South Africa, for example, is considered a leader in this regard through the implementation of its Renewable Energy Independent Power Producer program – which mobilizes independent power producers to enhance energy access and security. By ensuring the private sector takes an actionable role in developing renewable power projects, the country is positioning itself as a top green energy market.
In addition to government-led power generation initiatives, Africa is seeing various other economic sectors pursuing power generation, transmission and distribution licenses. The adoption and development of renewable energy systems across the manufacturing, agriculture and mining industries is not only driving economic growth in these industries, but is ensuring that the entire continent strives towards a secure energy future. Rather than relying on grid connections, the development of independent power systems is reducing reliance on the grid, creating more consistency regarding power supply, and even creating the opportunity for the feeding back of electricity into the grid.
Notable examples include Unilever Tea Kenya – Africa’s largest tea producer – who is seeking a generation license to reduce reliance on utility Kenya Power; Premium Poultry Farms – the largest egg provider in Nigeria – who has partnered with Norwegian impact investor Empower New Energy and renewable energy services provider Resource Energy to connect a 700 KWp solar plant to the farms; and Sibanye Stillwater, Impala Platinum Holdings and Anglo American, who are all scaling up renewable energy generation at their mining operations in South Africa. By enabling industries to develop their own power generation systems, Africa is bypassing the need for heavy investments in hydrocarbon-fired power systems, enabling multiple industries to develop their own power generation capacity while improving domestic capacity.