Publication Title: Green energy in Africa presents significant investment opportunities

Publication Type: Essay

Publication Authors: César Augier, Hauke Engel, François Jurd de Girancourt, and Oliver Onyekweli

Publication Date: Oct. 17, 2023

Publication Link

The energy landscape in Africa is rapidly evolving with an increasing focus on renewables and sustainability.

1. Importance of Electrification:

  • Africa's population is set to double by 2050, necessitating a tremendous surge in energy needs. The demand for electricity will grow sixfold.
  • Despite this growth in energy needs, a transition to efficient technologies can limit the increase in final energy consumption to only 50% by 2050.

2. Changes in Energy Production:

  • The continent needs to diversify its energy production methods. By 2050, it's anticipated that renewables (solar, wind, hydro) will constitute 95% of the energy capacity.
  • Solar energy will dominate, constituting approximately 70% of the installed capacity, followed by wind (20%) and hydro (10%).

3. The Role of Gas and Hydrogen:

  • Gas will provide flexible capacity in the short to medium term, supporting the transition phase as renewables scale.
  • Africa's potential for green hydrogen production, especially in northern and southwestern regions, is vast. The green hydrogen market offers promising export opportunities.

4. Investment Opportunities:

  • An estimated $2.9 trillion in cumulative capital expenditure is necessary between 2022 and 2050 to facilitate this energy transition, with a significant portion dedicated to green-energy sources.
  • By 2050, the annual investment requirement will double to $160 billion, with a major focus on hydrogen (43%), renewables (38%), and power infrastructure (17%).
  • Notable investments include South Africa's Just Energy Transition Investment Plan, worth $8.5 billion.

5. Infrastructure Development:

  • Investment in electricity transmission and distribution infrastructure cumulative investment of $400 billion by 2050. Countries such as Egypt, Morocco, Nigeria, and Senegal are expected to lead this effort.
  • Significant projects include the electricity interconnection between Egypt and Saudi Arabia; Vinci Energies' project in Morocco to construct electricity infrastructure.

6. Potential Challenges and Considerations:

  • The massive capital requirement underscores the need for robust financial strategies and international collaborations.
  • Rapid technological advancements and policy support are fundamental prerequisites for this transition.