From Potential to Progress: What Does Africa Renewable Energy Journey Look Like?

With 33 out of the world’s 47 least-developed countries nestled within its borders, and with more than half of the population in Africa having no access to electricity, the African continent stands as a veritable gold mine for those with a vision for progress in renewable energy. This article focuses on the progress made against the renewable potential of African countries.

With the rapid adoption of renewable energy worldwide, Global renewable power capacity is now expected to grow by 2400 gigawatts (GW) over the 2022-2027 period, an amount equal to the entire power capacity of China today, as per Renewables 2022, the recent International Energy Agency (IEA) report for the sector. Further, renewables are set to account for over 90 per cent of global electricity expansion over the next five years, with the world set to add as much renewable power in the next half decade as it did in the past 20 years. In the course, the sector will overtake coal to become the largest source of global electricity by as early as 2025.

The Western world of Developed nations has reached the pinnacle of energy usage, and the developing regions, like India, China, South East Asia and the Middle Eastern nations, are catching up at a considerable pace. The developed and developing world are firing on all cylinders for energy transition to clean energy, such as solar, wind, hydro, etc.

In a world where renewables are being adopted with fervour, what’s the renewable status of the resourceful continent of Africa? This blog briefs about the progress made by African nations on renewables and the potential the continent holds for green energy transition.

What is Africa’s Potential for Renewable Energy?

An energy system centred on renewable energy can help resolve many of Africa’s social, economic, health and environmental challenges. The continent boasts a vast resource potential in wind, solar, hydro, and geothermal energy. Further, the falling costs are increasingly bringing renewables within reach. Central and Southern Africa have abundant mineral resources essential to the production of electric batteries, wind turbines, and other low-carbon technologies.

Africa is the largest sun-baked region in the world and is home to about 60 per cent of the world’s best solar resources. A Renewable Energy Market Analysis report for Africa by IRENA notes that the continent boasts a solar PV technical potential of 7,900 GW. In addition, the continent has an additional potential for hydropower (1,753 GW), and wind energy (461 GW). Some parts of Africa also have geothermal and modern bioenergy potential.

With an expected growth in solar photovoltaics (PV) to 650 gigawatts by 2050, the continent has the potential to become a global green manufacturing hub in roughly 2 decades.

Moreover, the energy transition will also lead to job creation opportunities by driving the development of new industries. IRENA’s analysis shows that renewables and other energy transition–related technologies have already created 1.9 million jobs across Africa, a number that will grow substantially as countries invest further in the energy transition. Reportedly, every million U.S. dollars invested in renewables between 2020 – 2050 would create at least 26 job-years; for every million invested in energy efficiency at least 22 job-years would be created annually; for energy flexibility, the figure is 18.

As per one IEA report, released in 2021 in collaboration with the World Bank and the World Economic Forum, the annual clean energy investments in emerging markets and developing economies need to increase sevenfold by 2030 – from less than $150 billion in 2021 to over $1 trillion – to put the world on track to reach net-zero emissions by 2050.

Perhaps most importantly, and a factor that is usually not talked about is the irony of a poor transmission grid in Africa. With just a handful of countries having a real national grid, vast parts of the continent, and the many countries within, including large ones like Nigeria, Sudan, and even Tanzania and Kenya, offer tremendous scope for efficient use of distributed renewable energy. That will save costs (always a key factor in a capital starved continent) and ensure faster roll out of energy access too.

Notable Developments in the Renewable Sector

Renewable energy deployment has grown in the last decade, with more than 26 GW of renewables-based generation capacity added by the end of last year. The largest additions were in the solar energy spectrum. Compared to the first decade of the century, the average annual investments in renewable energy grew tenfold in the last decade from less than USD 0.5 billion in the 2000-2009 period to USD 5 billion in 2010-2020.

The trend of investments accelerated at the start of this decade. Countries in Africa and around the world have all recently reaffirmed their commitment to impact-building and strategic, long-term projects that benefit the energy transition and promote economic stability in Africa.

In June 2023, SA-H2, a specialized blended finance fund, was established to generate $1 billion in funding to support the establishment of green hydrogen projects in South Africa. Once operational, SA-H2 will collaborate with the SDG Namibia One Fund to provide a comprehensive finance solution for the green hydrogen sector in Southern Africa. This significant development occurred approximately one month after the Africa Finance Corporation and Japan Bank for International Cooperation (JBIC) signed a memorandum of understanding to cooperate on infrastructure projects that accelerate Africa’s energy transition.

In January 2023, the European Union and its member states launched the Just and Green Recovery Team Europe Initiative for South Africa as part of their Global Gateway program, which substantially boosts the continent’s green energy initiatives. Concurrently, Sustainable Energy for All (SEforALL), the African Climate Foundation, Bloomberg Philanthropies, ClimateWorks Foundation, and the Chinese Renewable Energy Industries Association (CREIA) initiated the Africa Renewable Energy Manufacturing Initiative (AREMI). AREMI’s primary aim is to facilitate the necessary financial, technical, and socioeconomic investments to drive clean energy development and transition in Africa. Around the same time UAE signed a key agreement with Zambia to provide $2 billion for the development of solar power plants. Recently, Angola also secured a loan of €1.29 billion ($1.41 billion) through the assistance of Standard Chartered Bank, UK.

Looking back to 2022, the G7 countries unveiled the Partnership for Global Infrastructure Initiative (PGII), a lending initiative totalling $600 billion, dedicated to funding sustainable infrastructure projects in developing countries, with a particular focus on Africa. Additionally, in February of that year, the European Commission announced an investment funding package of €150 billion for Africa.

Major Impediments

Despite boasting such a huge potential for renewable energy, the dearth of global investments in the countries of the continent has restricted its renewable growth. Only 2 per cent of the global investments in renewable energy in the last two decades were made in Africa, that too with significant regional disparities. Dependency on grants and aid has also not helped, as these donot usually lead to the optimum investments in technology or suppliers.

Dependency on fossil fuel exports is another challenge. While the clean energy transition holds large opportunities for countries in Africa, many African countries are highly dependent on commodity exports, including fossil fuels. In fact, fossil fuels remain among Africa’s largest exports. In a low-carbon future scenario, these fossil fuel-dependent countries are increasingly exposed to the risks of stranded assets, with nascent manufacturing capabilities caught between changing approaches to energy. Also, given a choice in using something available locally in relative abundance versus importing say Solar equipment, the choice is too clear for many. Much like India’s travails with coal available locally versus gas and cleaner fuels. Thus, a carefully planned approach is required to exploit this vast potential of the region.