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What drives African renewables to new heights (and what doesn’t)
The continent’s solar and wind farms keep getting bigger – and so do the challenges – but not for the reasons you may think
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Hello – Not so long ago, the renewables sector in Africa was thought of as “the future”.
Now increasingly it feels like the present. We’re not fully there yet but it’s coming into view.
A quarter of African power originates from renewables now, roughly double of a decade ago.
And the growth rate is accelerating (along with the number of hurdles to clear). But why?
To understand the sector’s approaching future, one needs to look at the drivers.
⏳ Today’s reading time: 4 mins
LOGISTICS UPDATE | Thursday 11 July
EVENTS…
📆 Kenya hosts conference on renewable energy integration (Aug 16)
📆 Namibia holds Southern African wildlife management meeting (Oct 6)
📆 Rwanda hosts Africa healthtech summit in Kigali (Oct 29)
AND JOBS…
💼 Burn is hiring a business development manager (Nigeria)
💼 WorldAgroforestry seeks a leader in climate change & energy (Kenya)
💼 PATH seeks a senior program officer in vaccine innovation (Senegal)
1.🚁 Heli view: Hydrogen, hardware and the greening of investment drive African renewables
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The size of African renewables projects has ballooned in recent years.
This is especially true for solar & wind, though less so for geothermal & hydropower.
Investment funds increasingly drive the former, while African governments fail to boost pet projects among the latter.
The latest: The past month has seen further leaps toward mega-projects. Many are on a par with some of the largest in Asia.
Solar side: In early July, SolarAfrica Energy started construction on the first phase of its 1 GW SunCentral solar park in South Africa's Northern Cape.
The project is key to the coal-fed country’s aim for net-zero energy systems by 2050.
Solar currently represents 9.5% of South Africa's 65 GW energy mix.
Even bigger: Industrial partners, including Africoast and Golden Sunshine, trumpeted co-developing a 6 GW pipeline of South African solar and wind energy projects.
In the meantime, Ghana finished installing Africa’s largest floating solar system.
And DR Congo is to start the largest mini-grid project in Africa.
While Egypt said it’ll get 58% of its power from renewables by 2040, up from 12% now.
Wind in sails: Egypt affirmed plans to build a $10 billion, 10 GW wind farm, one of the world's largest, to be completed by 2032.
The so-far largest African wind farm, Kenya’s Lake Turkana, has 0.31 GW.
And more: Voltalia signed a deal to develop 2.5 GW of solar and wind capacity in Egypt.
Numbers of this size were once rarely heard outside African hydropower.
Now GW-size announcements are made monthly.
The drivers: What’s behind this is the subject of much debate. We’ll assess the arguments.
Geo-politics: It’s easy to point to competition between China and Russia on one side, and America and its allies on the other. Throw in references to war-fuelled oil price hikes too.
But we don’t see that as a substantial factor.
The capital coming to Africa is rarely directed by state leaders.
Nor is it primarily American, Russian and Chinese.
A lot of the money is EU & Arab, only in part linked to fuel prices rises.
Attention economy: Another popular explanation is inspired by media coverage. Is the AI boom fuelling demand for power-hungry new data centres, and has last year’s high-profile Africa Climate Summit opened the floodgates?
This misunderstands the long-term nature of investing.
Year-old trends have not yet resulted in billion-dollar projects.
Though useful, their impact so far is minor.
Actual drivers: Instead, enduring changes on the supply and demand side of African energy are key. They can be summed up as follows:
A boom in green hydrogen and electric vehicles has shifted long-term demand curves.
And a decline in Chinese hardware prices due to state-funded overcapacity has tilted supply curves.
Available capital: The other main driver is a structural shift in the nature of the capital invested in Africa.
Many global investors now find it easiest to raise funds labelled “green”, and among green opportunities in Africa few have scale to absorb capital like renewables.
And fund-managed capital increasingly dwarfs African state spending, not least given a sovereign debt crisis.
That explains part of the shift from large hydro and geothermal projects (long championed by governments) to often off-grid solar and wind, favoured by foreign investors, along with the hardware price decline mentioned above.
Zoom out: If this all sounds a little too good, fear not, there are plenty of challenges left.
Egypt may be investing heavily in green generation but its grid infrastructure is failing.
And this isn’t the first time Egypt has announced a 10 GW wind farm, and then put it off due to land right disputes.
Meanwhile, an ambitious $30 billion (!) power line from Morocco to Britain struggles with cash and permits.