This is an extract from a recent report “Africa’s energy transition: solar and wind fuel energy security” prepared by Zero Carbon Analytics.

From 1751 to 2017, Africa contributed only 2.73% of global carbon dioxide emissions. When North African countries and South Africa are excluded from this calculation, 48 African countries – home to more than one billion people – have contributed only 0.55% of global CO2 emissions. The average energy use on the continent per person remains substantially below the global average. Compared to the rest of the continent, South Africa is an outlier and has the highest per capita energy use in Africa, more closely matching the global average. 

Though Africa only accounts a tiny percentage of global CO2 emissions, renewables deployment has grown substantially over the last decade, doubling between 2012 and 2022, from 28.45 GW to 58.78 GW, with an average year-on-year growth rate of 7.6%. South Africa has seen the highest growth in generation capacity, followed by Egypt. As of 2021, around 25% of installed capacity on the continent was renewables-based. Despite this growth, Africa still only accounts for less than 3% of total global renewables capacity. Renewable energy development on the continent remains underfunded, leaving significant untapped potential for increasing renewable power generation and improving energy access and security.

Renewable electricity generation 

Three of the top 10 countries globally with the highest share of their grid powered by renewable energy in 2022 were in Africa. Ethiopia generated 98.1% of its electricity from hydropower, biomass and onshore wind; Lesotho’s grid was 99.3% powered by hydropower and a small amount of solar; while 95.5% of the Democratic Republic of Congo’s electricity came from hydropower. At the regional level, renewables accounted for 72% of electricity generated in Central Africa in 2019, and 71% in East Africa. This is followed by southern Africa with 27%, West Africa with 25% and North Africa with 9%. In terms of absolute renewable energy generated, southern Africa accounts for 19 GW – around a third of the continent’s total – followed by North Africa and East Africa. The majority of renewable power generation on the continent comes from hydroelectric, followed by wind, solar, geothermal, and biomass and waste. 

While access to electricity in Africa has improved substantially over the last decade, many people still lack access, particularly in rural areas and peri-urban areas (mixed rural-urban landscapes on the outskirts of cities). In 2020, electricity access was below 50% in 24 African countries, due to inadequate generation capacity and insufficient and poorly maintained transmission and distribution networks. Off-grid renewable systems, which have short lead times and can therefore be deployed rapidly, offer a solution to limited electricity access in Sub-Saharan Africa, particularly in rural areas where grid expansion is not possible. Stand-alone off-grid solar systems – such as solar lights, home solar systems and mini-grids – have improved access to electricity on the continent, with their use having seen a compound annual growth rate of 62% between 2009 and 2019. Around 8% of households in Sub-Saharan Africa with electricity access rely on off-grid solar systems. Globally, 70% of investments in the off-grid sector went to Africa between 2010 and 2020, totalling USD 1.7 billion. These investments grew at a compound annual growth rate of 83% during this time. 

Wind capacity in Africa has steadily increased since 2000, with annual installations topping 800 MW in 2014, 2018, 2021 and 2022. South Africa has the highest installed wind capacity on the continent, accounting for 41%, while Morocco has 22% of total capacity and Egypt accounts for 21%. Based on both installed wind farms and those that are under construction and set to be commissioned in 2023, total wind generation capacity on the continent will be 9 GW – which includes new installations in Senegal, Réunion, Nigeria, Tanzania and Djibouti. The Taiba N’diaye wind farm in Senegal, which accounts for 15% of installed capacity in the country, provides power for more than two million Senegalese people.

Based on planned and announced wind farm projects across Africa, a further 86 GW is expected to be added – an increase of over 900%. Major planned wind farm developments in Egypt – including a 10 GW farm in the Gulf of Suez, which will be one of the world’s largest – align with the country’s goal for renewables to account for 42% of its energy mix by 2030. The technical potential for wind power in Africa is estimated to be 461 GW, with Algeria, Ethiopia, Namibia and Mauritania possessing the best potential.

Solar energy is the fastest-growing renewable energy resource in Africa, with an average year on-year growth rate of 89% between 2011 and 2021. Africa holds 60% of the world’s best solar resources, though it accounts for only around 1% of installed solar PV capacity. The technical potential for solar power on the continent is estimated to be 7,900 GW. South Africa had the highest amount of solar capacity in 2021 with 5.3 GW, while Morocco followed with 2 GW and Egypt had 1.3 GW. These three countries accounted for 65% of all installed solar capacity in Africa in 2021.

Remarkable scaling up of renewable investments 

Compared to the 2000-2009 period, annual average investments in renewables on the continent grew tenfold in 2010-2020, rising to USD 5 billion from less than USD 500 million. Investments totalled almost USD 60 billion over those two decades, and grew on average by more than 96% per year, much higher than the global rate of 7%. However, despite this high growth rate, the cumulative sum of renewable investments over the last two decades totals only 2% of global funding. New renewable capacity additions have also lagged in recent years, reaching an 11-year low in 2021.

Solar and wind have together accounted for around 87% of investment in renewable technology in Africa since 2010 – 57% for solar and 30% for wind. The share of total renewable investments in Africa directed at solar technologies increased from just 2% in 2011, to 62% in 2012, and has remained between 40% and 80% since then. Clean energy created more jobs in Africa than fossil energy over the 2019-2022 period, and growth in the off-grid sector in Sub-Saharan Africa is estimated to have increased solar PV jobs to 115,000 in 2022. The wind power work force in Africa expanded by more than 75% in 2022.

South Africa received the highest cumulative renewable energy asset finance over 2010-2021 at USD 23 billion, followed by Morocco which attracted USD 9.36 billion, Egypt which received USD 7.14 billion and Kenya which gained USD 6.69 billion. Trends in private energy investments on the continent are encouraging: during 2010-2020, 86% were directed at renewables in southern Africa, 82% in East Africa and 67% in North Africa. Independent power producers are now one of the top sources of investment in Africa. Renewable projects in Africa offer an attractive investment: general project default rates – the percentage of outstanding loans that are unpaid after a prolonged period – are lower in Africa compared to the rest of the world.

Case Studies

South Africans take energy security into their own hands: A survey conducted by climate change think-tank E3G in 2019 found that 80% of South Africans believe that investing in renewables is better than investing in fossil fuels in the long term. The electricity crisis in South Africa, where peoples’ livelihoods are impacted by power outages caused by an ageing coal fleet without sufficient generating capacity, has driven citizens to invest in rooftop solar. Scheduled power outages – known as ‘load shedding’ – have been sporadically implemented since 2015 but have seen a drastic uptick in frequency and severity over the last year. Since September 2022, South Africans have experienced load shedding on a near-daily basis. The state-owned power utility Eskom, which generates most of its power from coal, is one of the biggest polluters in the world. South Africa ranks eighth in the world in terms of the amount of coal used for energy generation and has the highest carbon intensity – the amount of CO2 emitted per unit energy – of all G20 states. 

The present energy crisis that South Africa is facing is the result of Eskom failing to add sufficient electricity generation to the grid. Renewables procurement has lagged due to Eskom’s persistence in investing in coal projects, which have been marred by poor planning and ineffective contracting, delaying of renewables projects, and pursuit of expensive and controversial nuclear projects. South Africa might miss its legally-binding 2030 emissions target under the Paris Agreement as it extends the life of coal-fired power plants for longer than planned. The power generated at peak production from solar panel imports in 2023 matches the generation capacity of some of South Africa’s coal-fired plants. Once installed, the energy generated from residential rooftop solar will exceed the solar energy the government has procured over the last decade. 

As the cost of solar installations continues to decrease, in the first half of 2023, South Africans imported USD 2.5 billion worth of solar panels, lithium batteries and inverters – further emphasising the exponential rollout of renewable energy by citizens. In Johannesburg and Cape Town – the two largest cities in South Africa – feed-in tariff incentives are being offered by the government to encourage citizens to sell their excess solar energy to the grid. The government is also providing short-term tax incentives to households for investing in solar. It is estimated that by 2025, renewable energy produced by the private sector (including home rooftop solar) and independent power producers will be higher than the electricity produced by Eskom’s fleet. The estimates suggest that by the end of 2025, the private sector will generate 26,600 MW of electricity, up from 13,300 MW in March 2023, while Eskom will generate 25,200 MW.

Namibia switches to solar in response to South African energy crisis: Namibia imports the majority of its electricity from neighbouring South Africa, but has turned to solar as imports became expensive and unreliable due to the power crisis. State-owned utility Nampower has attracted private investment through the auctioning of independent power projects. The Namibian government – together with the European Union and other investors – plans to develop the largest fully-integrated green hydrogen project in Sub-Saharan Africa, which is expected to produce two million tonnes of green fertiliser per year before the end of the decade.

Burkina Faso, Cameroon and Tanzania set for rapid transitions to clean power: Based on a comparison of current renewable capacity and renewable expansion plans, Burkina Faso, Cameroon and Tanzania are within the top 10 countries globally expected to experience the most dramatic energy transitions in the next five years. In Burkina Faso, solar parks currently seeking permits or being built are set to double the share of solar in its grid to 34% in 2027 from 16% in 2022. In Cameroon, the construction of large hydropower projects is expected to increase renewables generation capacity by 28 percentage points by 2027. In Tanzania, hydropower, wind and solar projects are set to more than double the country’s renewable energy share to 54.1% in 2027 from 25.7% in 2022. 

Kenya – a geothermal powerhouse: About 73% of Kenyans living in rural and urban areas strongly approve of renewables development, with 91% believing that it will reduce the cost of electricity. At the same time, only 31% of Kenyans have a positive view of fossil fuels and nuclear power. Renewables have powered more than 80% of electricity generation in Kenya since 2018, and this share reached 90% in 2020. The renewable electricity sector in Kenya has grown substantially over the last few years, with a compound annual growth rate of 13.1% from 2015 to 2020. Kenya is the world’s eighth largest producer of geothermal energy and currently has more geothermal capacity under construction than any other country in the world. It will soon become the fourth largest producer of geothermal energy. Geothermal energy currently accounts for 45% of Kenya’s electricity generation. 

There is a high level of investor interest in Kenya’s renewables sector, as showcased by several recent major developments, including an Australian-backed 300 MW geothermal and green fertiliser plant and a UK-backed 35 MW geothermal plant.

Despite progress in renewables generation, investment in Africa’s clean energy transition is lagging 

In comparison to the rest of the world, and despite recent growth trends, renewables have been critically underfunded in Africa. Between 2015 and 2022, the average renewables investment per year in Africa was USD 11 billion – which is just below 3% of global average yearly investments for the same period. By contrast, average yearly investments in fossil fuels in Africa over the same period made up a larger proportion of the global average at around 7% – just over double that of renewables. Gas has accounted for the majority of net capacity additions, with just over 62,000 MW of gas added between 2011 and 2021 compared to 13,305 MW of solar and 6,999 MW of wind. The IEA and the African Development Bank Group estimate that, in order for Africa to achieve its energy and climate goals and universal energy access, around USD 200 billion of investment is needed every year until 2030 – more than double current annual investments. 

Access to finance remains a key barrier for the renewable energy transition in most African countries – capital costs for utility-scale projects can be up to three times higher than for developed economies. Renewables investments in Africa have been concentrated in a handful of countries. Between 2010 and 2020, 90% of investments went to 14 out of a total of 55 countries, with 75% of this received by only four countries: South Africa, Morocco, Egypt and Kenya. Enabling policies and financing mechanisms are believed to have attracted these investments. Scaling up of financing and reducing perceived investment risks will be necessary in order to attract private investment in clean energy. Concessional loans – loans that have favourable terms such as below market interest rates – are key to encouraging investment. 

According to Bloomberg, there are three common barriers hindering investment flows in renewables in Africa: a lack of consistency in clean power procurement processes, poor planning around grid expansion and electricity access, and domestic investors’ lack of knowledge of clean energy opportunities. Transmission and distribution infrastructure in Africa suffers from underinvestment, receiving only 0.5% of energy investment between 2011 and 2021. Generation capacity received 95.5% of investments over the same period. Unreliable power grids are hampering economic growth on the continent, costing countries up to 2% of their annual GDP.

Access the complete report here.