Africa's Green Energy Leapfrog

By Haley Zaremba – Jul 29, 2023, 4:00 PM CDT

Sub-Saharan Africa’s population is expected to double by 2050, leading to a predicted increase in energy demand by a third over the next decade and necessitating a ten-fold increase in power generation capacity by 2065.
Africa has abundant resources such as natural gas, sunshine, wind, and rare Earth minerals, creating significant potential for renewable energy growth.
The challenge lies in ensuring that Africa’s renewable energy production capacity is harnessed to serve its own urgent energy needs, as well as achieving decarbonization goals.

Electrifying Africa is going to be one of the most significant challenges (and promising economic opportunities) of the global clean energy transition. The population of sub-Saharan Africa is the fastest growing in the world, expected to double by 2050. To put that in perspective, by midcentury one in four people on the planet will be in sub-Saharan Africa. Considering the significance of the African population on the global stage, and the need to connect those people to clean and reliable energy, the continent poses a significant challenge for climate goals on a global scale.

As sub-Saharan Africa grows and industrializes, African energy demand is expected to increase by a third over the next decade. Meeting this demand will require a ten-fold increase in power generation capacity by 2065. The problem is that in order to comply with decarbonization imperatives, Africa has to “leapfrog” over what is normally the next phase of development in a poor nation’s economic journey. Today, 600 million people across the African continent still lack access to energy. But while most economies had the good fortune of developing their economies in an era where there was no pushback for burning as many fossil fuels as suited them, African leaders are facing the necessary and virtually unprecedented necessity of skipping straight to cutting-edge (and comparatively expensive) green technologies.

The irony is that while Africa represents the greatest concentration of energy poverty in the world today, it also represents one of the most significant markets for renewable energy production growth potential. The continent is extremely rich in natural gas (considered to be a stepping stone away from dirtier fossil fuels like coal and oil), as well as abundant sunshine, wind, and highly sought-after rare Earth minerals such as lithium and cobalt which are essential components of renewable technologies including photovoltaic solar panels and lithium-ion batteries for electric vehicles and renewable energy storage.

Foreign investors are already flooding Africa in order to develop energy resources in order to shore up their own energy security. Russia and China have been investing in emerging African energy markets for years in a competition to establish dominance in the region, and European countries are increasingly pushing into Northern Africa to build mass-scale solar farms in the Sahara Desert. Now, after decades of decline, manufacturing in sub-Saharan Africa is on an upward trend, and solar panels built in Africa are already cost-competitive with those built in China.

While Africa is all but guaranteed to be the next big thing in global energy markets, however, there is no guarantee that this newfound renewable energy production capacity will meet the enormous and urgent demand of Africa’s own energy grids. Instead, renewable energy supply chains are being established by foreign countries in order to serve the needs of those foreign countries. It’s a dilemma. Africa direly needs the money offered through such contracts, but it also desperately needs all of the energy it can get. After all, half of the continent’s population lacks reliable access to energy – a fundamental barrier to development.

Furthermore, those renewable energy resources are an absolutely necessary piece of Africa’s ability to reach decarbonization goals and “leapfrog” fossil fuels – which is a net gain for the entire planet. But the issue, once again, is money. Rich countries have the money to develop those supply chains (for their own needs) – but for African leaders, it’s another story. A recent study published in the journal Scientific Reports calculates that the cheapest investment cost from all case scenarios that would achieve a renewable energy-powered grid in Africa would be $298 billion.

By Haley Zaremba for Oilprice.com