The continent represents a largely untapped white space, restricted by energy poverty and a lack of infrastructure
The International Energy Agency (IEA) estimates $110 billion will be invested in energy across Africa in 2024, as global players leverage the continent’s potential for solar, wind and natural gas production.
Continued growth is dependent on significant investment, targeted at improving African energy infrastructure and human skill sets to support the global energy transition from fossil fuels to renewables.
According to Risana Zitha, Managing Director and Head of Africa at investment bank DAI Magister, emerging technologies, falling costs and digitalisation are paving the way to a profitable renewable business case across Africa. However, to successfully leverage this potential, a combination of attractive investment frameworks and policy development must be employed to relieve energy poverty in Africa, while strengthening its position in the global energy supply chain.
Zitha said: “A lack of investment in African energy infrastructure and maintenance has led to low-energy supply with high electricity costs, contributing to extreme energy poverty and notable ‘white space’ across the continent.
“Secondary impacts of a lack of affordable, reliable power include the reduced provision of education and public health, constricted economic development, and lower living standards. Establishing a framework that can scale to meet demand is essential if we are to improve household access to electricity and lessen the repercussions of energy poverty. Once in place, the foundations for a fully functioning energy market will deliver benefits on many fronts, creating jobs and attracting investment in the process.
“Spanning 54 countries of varying policies, regulations and levels of development, no single approach to energy accessibility can be applied across the whole continent. However, that does not make it less of a priority. While improved access will undoubtedly lead to a more resilient and prosperous economy, additional measures to drive digitalisation, including the adoption of online payment platforms, will aid in alleviating financial barriers for investors and end-users.
“Africa has no choice but to skip directly to renewable energy. Nigeria, Angola, Mozambique, Equatorial Guinea, Namibia and a very small number of other countries have oil and gas reserves of any significance and South Africa has coal reserves. Therefore, most other countries simply have no choice but to directly target renewable energy. The reward for energy companies that champion this approach is very high profit margins once they work out how to successfully scale their offering.
“After a reliable domestic energy pipeline is established, the next phase in the process is to export energy to neighbouring markets and bolster the global supply chain. In doing so, Africa can reap the full benefits of its renewable potential and convert abundant resources into genuine assets.”
Zitha concluded: “Efforts must be made to prioritise the development of modern, resilient and sustainable energy systems in Africa. Provided obstacles are navigated successfully and tackling energy poverty remains a key focus, Africa is at a pivotal point where its resources could redefine its global economic standing.”