The one word that captures Africa’s energy potential is abundance. The continent holds 125 billion barrels of proven oil reserves (7.2% of global reserves) and is home to 620 trillion cubic feet of proven natural gas reserves (7.5% of global reserves). Furthermore, about 84% of gas reserves in the pre-production stage are in Africa, which positions the continent to play a major role in supplying natural gas as a “transition” fuel in moving toward low-carbon or zero-emission energy sources. In addition to abundant fossil fuels, Africa has considerable potential in the renewable energy space. According to the International Energy Agency (IEA), the continent is estimated to hold a combined 60% of the world’s best solar (10 terawatt), hydropower (35 gigawatt), wind (110 gigawatt), and geothermal energy sources (15 gigawatt).
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Africa’s energy abundance also includes emerging sustainable fuels: the IEA estimates that the continent can produce 5,000 megatonnes of hydrogen annually, equivalent to the current total global energy supply annually. Additionally, Africa boasts considerable deposits of raw minerals, from cobalt to manganese to palladium and more, used in new energy technologies for electric vehicles, stationary energy storage, and green hydrogen (GH2) production.
Renewables as the pathway to energy prosperity
Despite its wealth of resources, Africa’s energy potential remains largely unfulfilled. Lack of investment in electricity infrastructure, particularly in generation capacity, distribution networks, and maintenance, has led to a combination of low-energy supply and high-electricity costs in many African countries. Energy poverty — which can be defined as a lack of reliable and affordable access to cooking fuel and electricity — remains a concern across the continent.
Poor access to reliable, affordable energy has often been a serious hindrance to economic and human capital development across Africa. Unreliable or no electricity access leads to lower enrolment and retention rates in schools and negatively impacts healthcare facilities’ ability to provide services. Additionally, the overreliance on biomass fuel for cooking and space heating has considerable detrimental health consequences.
With varying policies, government regimes, and levels of development across the 54 countries in Africa, no single approach can alleviate its energy challenges. Yet, renewables offer a pathway for many African nations to move forward in their quest for energy prosperity by offering a means to:
- Improve accessibility (i.e., access to a reliable and quality energy supply): This could help spur development by boosting productivity, economic diversification, and growth. Small-scale renewable energy has become increasingly affordable over the last decade. In remote areas where populations are dispersed, and where there is also a lack of traditional grid infrastructure, solutions such as solar, wind, hydropower, batteries, power packs, and modern biomass (renewable fuel produced primarily from waste products in the agricultural and food industries) could help to alleviate energy access challenges. Unimpeded by sunk costs from a centralized grid, some countries could potentially “leapfrog” traditional electricity models by promoting off-grid and mini-grid energy solutions for greater accessibility.
- Ensure affordability of electricity: While improved access to energy will likely lead to greater economic prosperity and subsequently reduce poverty rates, simple economics suggests that increased supply should, in theory, reduce the cost of electricity. However, additional measures are likely needed to reduce energy costs in Africa. For example, implementing innovative financial instruments, such as pay-as-you-go approaches, to alleviate or even remove financial barriers for both investors and end users.
- Promote long-term sustainability: Alongside accessibility and affordability, sustainability could prove vital. For example, investing in renewable sources like solar, wind, and green hydrogen power is sustainable and potentially more reliable than state-provided fossil fuel generation. New technologies also offer clean, renewable solutions. For example, Africa has the potential to produce up to 50 million tonnes of low-carbon modern biogas from agricultural residues, animal manure, and municipal solid waste through household scale biodigesters. The impact of and responses to climate change are also already underpin the long-term sustainability of the energy mix. Even though Africa’s current contribution to global emissions is relatively low, all 54 African countries have signed the Paris Agreement, with 40 countries including renewable energy targets and 38 countries highlighting ambitions to reduce emissions in their voluntary Nationally Determined Contributions.
Policy support as the key to enabling clean energy investment
Significant annual investment will be needed to achieve universal energy access by 2030 and scale Africa’s clean energy potential. However, African governments have historically struggled to implement longer-term visions or plans; create policy certainty, clarity and continuity; and adequately invest in the broader enabling environment to promote private sector activity.
For many African nations, mobilizing energy finance and private investment in clean energy and related infrastructure will require more clarity around energy policies and greater stability of the broader policy and regulatory framework. Achieving this higher level of certainty may involve actively setting targets for energy access, emission reductions, and climate change mitigation; planning and explaining how the shift from current to more sustainable and renewable energy will be “just,” (i.e., not negatively impacting society or livelihoods); and making the necessary regulatory changes, establishing incentives, and embracing financing innovations.
While each country’s path will be different, Africa collectively has an opportunity to leverage the urgency and momentum of the global energy transition to unlock its clean energy abundance – and in so doing, to achieve its goals of accessibility, affordability, and sustainability for the benefit of all.
Read the full report, Africa Energy Outlook 2023.
