Africa set to profit from new wave of investment in green energy

Africa’s energy sector is emerging following a tumultuous three years in which the impact of a global pandemic and an energy crisis sparked by Russia’s war with Ukraine sent energy costs spiralling upwards and staunched investment flows.

The continent, blessed with copious renewable energy resources – especially solar power – should be well placed to benefit from a new wave of global investment in clean energy technology, African Business said in a report.

“Clean energy is moving fast – faster than many people realise. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” International Energy Agency executive director Fatih Birol said on launching the IEA’s World Energy Investment Report in May.

“For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time,” he said.

As ever, Africa’s need to win a share of this global investment is pressing, given the urgent need to speed up efforts to achieve universal access to electricity across the continent. Despite considerable progress over the last two decades, there is still a long way to go.

Just over half of the population of sub-Saharan Africa still has no electricity access, a figure that rises to more than 70% for those in rural areas, according to recent World bank data.

There is optimism that Africa’s huge renewable energy resources can make real inroads into overcoming the continent’s energy shortfall, as industrial supply chains recover after the pandemic and technology costs fall.

Crucially, parts of Africa are no longer pioneering territory for renewables developers. Countries such as Egypt, Morocco, South Africa, Senegal and Kenya play host to significant solar and wind developments. Their track records are helping to de-risk more of the continent for investors.

Support from multilateral development banks (MDBs) and development finance institutions (DFIs) still underpins investment in many types of energy projects across much of Africa, but private funding is flowing, even if it is more evident in some parts of Africa than others.

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