Africa needs $90bn per year to meet energy needs

15 June 2016

Africa requires investment of between $60bn and $90bn per year to address its energy needs but innovative new technologies can help make up the shortfall, according to research. 

The Economist Intelligence Unit’s report said Africa needs roughly four times the investment recorded in 2014 to meet the goals set by the African Renewable Energy Initiative of 300 gigawatts (GW) of renewable energy capacity by 2030.

The report, commissioned by engineering group IHS Towers, said meeting this would goal would require a 680% increase in current deployment rates.

Renewable power generation capacity in sub-Saharan Africa is currently just below 30 GW, around 25-30% of total energy production.

However, hydroelectric power accounts for the majority of this figure, with other renewables, such as solar and wind power, accounting for between 4% and 5%.

The report identifies solar and wind energy as most technically feasible and also the renewable sources attracting the majority of investment.

Positive experiences in key markets like South Africa and Kenya should provide a lead in terms of the best strategies to adopt, it said.

However, the report identified how a large pool of African consumers are able to buy power but don’t have access to appropriately priced and designed options.

“Leapfrog” strategies such as pay-as-you-go contracts, technologies like pico-solar units (small, portable photovoltaic systems) and remote utility management software can sidestep the need for “clunky” infrastructure.

“In rural regions, off-grid power generation could create an entirely new type of ‘bottom-up’ network as island grids gradually become interconnected. As with mobile in Africa, the key will be smart business models, not just a reliance on cheapening technology,” the report said.

Government-backed procurement programmes are more likely to attract long-term investment than one-off investments, it said.

South Africa, Uganda and Zambia are leading in this approach, the report added.

Landlocked African nations need more agile supply chains to let developers quickly move equipment and replace parts like panels and turbines.

Implementing well-designed, standardised power purchasing agreements will also help attract developers, the report said. 

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