Africa’s clean energy future

hot air balloons in Serengeti National Park

With abundant clean energy and new investments in renewable energy technologies, Africa may be on the cusp of a clean energy revolution.

According to a report by the International Energy Agency (IEA), renewable energy will make up almost half of sub-Saharan Africa’s power generation growth by 2040. Like mobile phones and mobile payments before it, clean energy technologies could provide a substantial boost to Africa’s fledgling economies.

Africa receives more sun than any continent on Earth and has a coastline rich in wind and wave energy capacity. Add to this geothermal power in the East African Rift and smart energy policies could enable Africa to leapfrog fossil fuels.

Research by McKinsey indicates that Africa’s potential clean power generation capacity is 1.2 terawatts excluding solar, and more than 10 terawatts including solar. This covers 350 gigawatts of hydro, 109 gigawatts of wind capacity and 15 gigawatts of geothermal.

20 African economies are forecast to expand at an average rate of 5 percent or higher over the next five years.

The value of clean energy technologies is that they are comparably cheap and largely decentralized. In fact, several African countries are already positioning themselves to harness these clean energy for this reason. Rwanda and Ethiopia, for example, have increasingly focused on sustainability, while Kenya has committed to a complete transition to green energy.

Africa is rapidly becoming an investment opportunity. Home to several of the world’s fastest-growing economies, the African region is expected to maintain an overall economic growth of 3.8 percent. In fact, 20 African economies are forecast to expand at an average rate of 5 percent or higher over the next five years. Notwithstanding rising debt challenges and a swelling population, Chinese-backed financing is accelerating energy infrastructure development across the continent.

Moving beyond fossil fuels

downtown Cape Town South Africa

Beyond the large, top-down and centrally managed energy production systems that favor fossil fuels, Africa’s renewables will increasingly be built on modular user-driven networks. As artificial intelligence and other automating technologies are deployed over the next two decades, the renewable energy sector will become increasingly self-optimizing and efficient. As new technological advancements including battery storage and microgrids become cheaper and more durable, Africa’s clean energy revolution will expand, powering the continent’s growing economic prowess.

With a population of more than 1.3 billion people, Africa has an enormous and growing need for reliable energy. Sub-Saharan Africa has 13 percent of the world’s population, but almost half of the global population without access to electricity. By 2040, sub-Saharan Africa will consume as much electricity as India and Latin America combined did in 2010. Yet more than two-thirds of the region’s population currently lacks access to reliable energy— particularly its rural communities.

Africa’s current energy needs are met through a mix of biomass and fossil fuels. Fossil fuels make up three-quarters of African energy needs with demand expected to triple by 2040.  China is Africa’s largest development partner in the energy sector and is largely focused on fossil fuels. Chinese contractors have provided 44 percent of the fossil fuel (coal, oil, or natural gas) capacity added in sub-Saharan Africa between 2010 and 2015. However, China’s clean energy investments in Africa and China’s emergence as a clean energy superpower could facilitate a long-term shift to renewables.

Energy consumption and economic development are closely linked. Building off solar panels, small-scale wind and hydro technologies, and energy saving devices, clean energy technologies could neutralize the intensive investments traditionally required for energy. The U.S. Department of Energy projects that utility solar PV costs will decline 60 percent by 2050. Combined with the falling price of battery storage, solar and wind technologies could support a distributed energy infrastructure that powers Africa’s social and economic development for decades to come.

Policy challenges ahead

wind mills on top of a mountain

At base, long-term capital investment is the key to Africa’s clean energy future. Where Africa’s abundant renewable energy resources remain untapped, China’s capacity to drive both clean energy financing and technology transfer could reshape the region.

China installs the largest amount of renewable energy capacity in the world. Moreover, it holds more than 150,000 renewable energy patents (29 percent of the global total) and invests more in overseas renewables than any other country. In fact, Asia has become the main driver for clean energy globally, responsible for 58 percent of the new installed capacity.

The China-Africa trade and investment nexus could provide exactly the right formula for both regions. For China, developing new markets for its clean energy technologies is critical to its’ long-term strategies. Constructing a comprehensive trade network for Chinese goods is now China’s overarching goal.

The policy challenge for Africa is to ensure that regulatory frameworks across the continent are conducive to investors and public projects alike. This means regulatory systems that support public-private partnerships while respecting environmental limits.

Much as the shift to fossil fuels enabled the rise of the United States and Europe, so renewable energy could remake Africa’s energy landscape. Leapfrogging fossil fuels will require massive investments as well as deliberate modernization across Africa’s public utilities. Where state-owned power utilities may be threatened by renewables, governments in Africa will need to demonstrate foresight in driving the shift around clean energy.

Mobilizing clean energy investment and scaling capacity will require massive political effort. This includes strong domestic leadership that builds on policy reforms and institutional capacity building.

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