Issue Brief

Africa’s Energy Transition Initiatives

Introduction

In February 2022, the African Union Climate Change and Resilient Development Strategy and Action Plan (2022-2032) brought out a comprehensive framework designed to guide the continent's response to climate change over the next decade. This strategy aims to harmonize and coordinate actions across member states, aligning with the broader objectives of Africa’s Agenda 2063 for inclusive and sustainable development.

As of 2023, Africa had about 62 GW of renewable energy capacity, or 1.6% of the global total. During the year, the continent added 2.7 GW and recorded a peak in RE investment with USD 15 billion going into the sector¹ . With the challenge of providing access to electricity for about 570 million people and access to clean cooking fuel for 960 million people in sub-Saharan Africa² , Africa has laid out ambitious objectives under the action plan.

The key strategic intervention areas that the strategy spells out include strengthening policy and governance, adopting pathways towards transformative climate resilient development, enhancing the means of implementation including climate finance and leveraging regional flagship initiatives. The strategy is to be actioned within the framework of seven guiding principles.

As the driest continent, half of Africa’s population resides in arid, semi-arid, dry, sub- humid and hyper-arid climate and much of it could be subject to water stress on account of climate change. In fact, it will probably experience faster global warming that other regions, with medium scenarios projecting warming up to 2 deg³ . With a high level of extreme poverty and as many as 33 least developed countries, the solutions to Africa’s climate action demand a high level of participation from other countries, if the world as a whole is to avoid the global impact of rising temperatures.

Key initiatives

Nairobi Declaration

Under the Nairobi Declaration on Climate Change and Call to Action by the African Union in September 2023, countries of the continent called for accelerated efforts to reduce emissions and urged for the international community to support increasing Africa’s renewable energy generation capacity from 56 GW in 2022 to at least 300 GW by 2030.

In line with this, the Accelerated Partnership for Renewables in Africa was launched in 2023 with 7 African nations as members and 4 supporting countries. This aims to work on expanding funding opportunities, capacity building and engaging with the private sector.

Africa Renewable Energy Initiative

The Africa Renewable Energy Initiative commenced in 2015 to install 10 GW of renewable energy by 2020 and this phase was successfully completed with the participation of 54 countries and close to 700 labeled projects. The AREI is now facilitating the target of 300 GW by 2030⁴ .

African Development Bank

Similarly, the African Development Bank is working on an initiative ‘Light up and Power Africa’. For example, under its flagship Desert to Power G5 Sahel Financing Facility, a USD 1 billion facility is available from 2022-2029 to cover the G5 Sahel countries of Burkina Faso, Chad, Mali, Mauritania and Niger. With support from the Sustainable Energy Fund for Africa (SEFA), a blended finance facility that is one of 7 major energy transition financing facilities in the world, AfDB is supporting programs to reduce risks in RE projects⁵ .

The International Renewable Energy Agency (IRENA) report titled "The Energy Transition in Africa: Opportunities for International Collaboration with a Focus on the G7" (April 2024) highlights Africa's significant renewable energy potential and the critical need for international support to address its energy access challenges. Despite possessing abundant renewable resources, Africa has received less than 2% of global renewable energy investments over the past two decades.

The report emphasizes that achieving universal energy access by 2030 requires a substantial increase in investments, estimated at USD 133 billion annually. At the same time, green industrialisation could create 26 million additional jobs in Africa by 2050, of which renewables would contribute 8.1 million jobs and energy transition related sectors would employ almost 17 million people.

Partnering with Africa

The African continent has huge potential in terms of RE, with 60% of the world’s solar resources and enough wind power potential to provide electricity to the continent to the tune of 250 times its requirements⁶. In terms of countries, Namibia has the highest potential and other countries in Africa such as Egypt, Libya, and Algeria also have high photovoltaic power potential as measured by kWh/kWp/day. Botswana, Morocco and Sudan also appear in the top 20 countries⁷.

In addition, Africa is home to vast resources to fuel the global climate change effort including critical minerals vital to global transition to clean energy and electric vehicles. About 55% of global cobalt reserves, 48% of manganese, and 22% of natural graphite, among others, are present in the continent, making it a potential hub for value addition and green industrialisation⁸.

The United Nations Economic Commission for Africa (UNECA) notes that policies for the continent have been adopted to leverage these resources, including the African Mining Vision, the African Commodity Strategy and the African Green Minerals Strategy. It estimates that energy transition will require about 3 billion tons of minerals and metals which Africa is well positioned to supply; however, the continent generates just about 40% of the potential revenue from these resources.

According to BloombergNEF, the achievement of the 300 GW target by 2030 would require four-fold increase in annual RE deployment from 8 GW to 32.5 GW. Moreover, the additional capacity is being driven by a small number of countries with South Africa, Morocco and Egypt accounting for more than two-thirds of the wind and solar capacity.

The IRENA report identifies key areas for collaboration between the G7 and African nations.

First, it urges for expanding available funding and support for developing projects in renewable energy generation, national and regional grids and storage that are attractive for investors.

Two, IRENA believes that donor governments and agencies should enhance public capital in African countries to develop energy access to households and commercial businesses.

Three, the effective management of critical minerals in Africa will be central to global energy transition and must be mined sustainably, while providing benefits to the local communities and generating revenues.

Four, developed countries can help African nations to build capacity for long-term planning and develop policies for a just transition

Conclusion

According to the World Energy Investment Report 2024 of International Energy Agency⁹, Africa will require investments of more than USD 200 billion each year by 2030 to meet its energy and climate goals. It states that around USD 110 billion was expected to be invested in Africa during 2023, with about USD 40 billion going into clean energy technologies. The huge business opportunity in ensuring Africa’s energy progress and transition can be tapped through partnerships between governments of advanced and African nations and industry.

In its recommendations to G20, the B20 action council on African economic integration suggested accelerating the pace of enabling universal electricity access in Africa, with a focus on driving investments in renewable energy. Detailed submissions were made under the following heads:

• Set up a dedicated body to support long-term energy planning and investment management for all African countries
• Promote the African Union’s vision of an African Single Electricity Market through dedicated technical and planning support, while also supporting formulation of related policy reform measures
• Promote innovative finance measures to boost private investment in renewable energy infrastructure, such as green bonds, blended finance, project bundling, feed-in tariffs and insurance.

Access to adequate energy for the population in a sustainable manner is being prioritised by African nations collectively as well as individually. The achievements under this effort can be made more inclusive and for this, the global business community would be a key player. Businesses across the G20 can work on building energy infrastructure, expanding access to finance, creating capacity for energy agencies and skill development across the clean power chains.

With a strong focus on Africa’s energy transition, the world will benefit in its climate action initiatives and global businesses must accord this effort a high priority.

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