Africa is endowed with massive renewable energy potential; here is how it can power the continent and put it on a development trajectory.
Africa is home to 60 percent of the best solar resources globally, yet the continent accounts for only one percent of installed solar PV capacity. Africa’s wind resource alone can power 54power the 54 countries 250 times over.
Additionally, Africa sits on 30 percent of the mineral reserves that are critical to renewable and low-carbon technologies such as solar power, electric vehicles and battery storage.
With global costs of solar PV and onshore wind having more than halved over the past decade, Africa can use its resources as a solution to the global climate crisis while developing its economies.
Renewables can dramatically boost African economies, grow new industries, create jobs, and rapidly connect the over 600 million Africans living without access to power.
Too little, too expensive capital flows
However, higher cost of capital for renewable energy projects in Africa presents a huge barrier. Interest rates for renewable projects in Africa are the highest at 8.2 percent on average compared to 4.4 percent in Europe and 5.4 percent in North America.
Africa’s high cost of finance has partly slowed large-scale project installations on the continent. There is actually enough money for renewables only that it is not flowing to Africa. Out of the $2.8 trillion that went into renewable energy between 2010 and 2020, only two percent came to Africa.
Renewable energy investments in Africa actually have a stronger business case than almost anywhere else in the world. According to the Worldto World Bank’s Global Solar Atlas, a commercial solar installation in Kenya or Nigeria generates 60 percent more energy than a similar-sized plant in central Europe.
The 310MW Lake Turkana Wind Power and the 100MW Kipeto wind farm, both in Kenya, have average capacity factors of 58 percent and 50 percent respectively—which are much higher compared to between 30 and 45 percent for onshore wind farms in America and Europe.
Investing in African solar and wind could potentially hand investors more returns, while ensuring consumers benefit from competitive rates.
Solar, wind equipment manufacturing opportunity
Wind and solar energy investments can promote the growth of domestic manufacturing industries. Establishing wind turbine and solar panel factories or component manufacturing plants locally can drive industrial development, attract investment, and create demand for local production capabilities. This would help develop a sustainable industrial base, enhance technological capabilities, and reduce reliance on imported equipment.
Renewables are the energy of the future, and Africa is better off investing in them.
The era of fossil fuels as the primary energy source is soon coming to an end, having powered the modern-day global economy at a heavy cost to the environment, with the planet heating up.
The economic model that most African countries inherited post-independence has failed to deliver universal energy access many decades later.
Nigeria, for instance, has long had its oil reserves extracted in huge volumes yet it still grapples with energy challenges. Likewise, South Africa, heavily reliant on coal-fired stations, continues to suffer from rolling blackouts.
Integrated energy solutions that combine the advantages of both centralised and decentralised approaches powered by renewable sources could address a long range of energy requirements across African societies.
To trigger a green energy revolution, several things need to happen, though.
African governments need to establish supportive policies and regulations that incentivize the development of clean energy projects. This would include implementing feed-in tariffs, renewable energy targets, tax incentives, streamlined permitting processes, and grid connection policies that facilitate the integration of more renewable power into the existing energy networks.
Multilateral development banks (MDBs) as well as development finance institutions (DFIs) should ramp up financial support for renewable projects installation with the twin goal of ending energy poverty in Africa and as a climate mitigation strategy.
There’s also a need for grid network upgrades to accommodate increased injection of renewables.
Technology transfer and capacity building is yet another important pillar in the adoption and deployment of clean energy technologies. Collaborative efforts between developed and developing countries can facilitate technology transfer, skills development, and training programs for local communities, engineers, and technicians. This will enable better operation, maintenance and management of clean energy projects.
Also important is community engagement and local ownership. Engaging local communities in the decision-making process and ensuring their participation and ownership of sustainable energy projects can foster social acceptance and local economic development. Community-led initiatives, cooperative models, and benefit-sharing mechanisms can provide direct benefits to local communities, including job creation, revenue sharing and improved access to electricity.
Boosting sustainable financing and ensuring a just energy transition where no one is left behind economic-wise is crucial, while at the same time addressing energy poverty, inequality, and gender gaps.
Alongside connecting households, it is imperative to fire up enough productive demand to soak up the new power capacity additions, necessary for a virtuous cycle of economic growth and decent jobs and incomes. Such new demand could come from relatively newer fields that need nurturing such as e-mobility, green manufacturing and green hydrogen derivatives such as fertiliser and e-methanol, among others.
Africa can and should take the lead in showing the rest of the world that it is possible to achieve prosperity without destroying the planet through green industrialisation, and green growth.
