A study by an African bank paints a mixed picture of the continent’s energy situation — one of scarcity and abundance.
This sets the tone for discussions at the premier global climate conference, COP27, set to begin shortly in the city of Sharm-El-Sheikh located on Egypt’s Red Sea front.
The report says that to achieve universal electricity access for the nearly 1.3 billion Africans, some 600 million of whom are off the grid, an annual investment of between $32 billion and $40 billion should be pumped into the energy value chain.
The study, done under the auspices of the Bank’s New Deal on Energy for Africa, exposes a financing gap that stands between $17 billion and $25 billion, with the continent’s large economies like Egypt, Nigeria and South Africa accounting for some 33 per cent of this deficit.
Africa’s most sophisticated economy, South Africa, is grappling with the worst energy crisis in years. Outages experienced by South Africa cost the continent 2 per cent to 4 per cent of its gross domestic product annually, according to the findings of the AfDB study.
The study also reveals that between 2019 and 2020, some $15 billion, equivalent to 26 per cent of total climate finance, was channeled into Africa’s energy sector.
The report shows that Africa’s energy investment needs are immense. The UN says that while a greater share of the global population gained access to electricity in the last decade, the number of people without electricity in Sub-Saharan Africa increased.
According to the Sustainable Development Goal 7 tracking report, Africa is unlikely to meet the SDG7 targets. To achieve its energy and climate goals, Africa needs $190 billion of investment a year between 2026 and 2030, with two-thirds of this going to clean energy, the International Energy Agency (IEA) said.
- Over 600 million Africans have no access to electricity
- Power consumption per capita in sub-Saharan Africa is the lowest globally at 370 kilowatt-hours (kWh) annually compared with 6,500 kWh (Europe) & 11,000 kWh (United States)
- Universal access to energy crucial for achieving SDGs, including poverty eradication (SDG1) & climate resilience (SDG13)
- At 46% in 2020, the share of fossil-based energy sources in Africa’s energy mix is modest compared with the share in other regions globally
- The principle of a just energy transition in Africa must consider past emissions & how they shape future emission trajectories
- At 46 percent in 2020, the share of fossil-based energy sources in Africa’s energy mix is relatively modest compared with the share in other global regions.
Source AfDB Africa Economic Outlook 2022
The World Bank, IEA and other partners have called on developed economies to provide more support to develop the energy and renewables sector in developing economies, including Africa.
In July, to chart the continent’s comprehensive short-, medium- and long-term energy development strategy, the African Union (AU) Executive Council, meeting in Lusaka, Zambia, adopted the African Common Position on Energy Access and Just Transition.
“This is an important and major step towards ensuring and confirming Africa’s right for a differentiated path towards the goal of universal access to energy, ensuring energy security for our continent and strengthening its resilience, while at the same time acting responsibly towards our planet by improving the energy mix,” AU Commissioner for Infrastructure and Energy Dr. Amani Abou-Zeid was quoted saying by Ghana News Agency (GNA).
She made the remarks on the sidelines of the AU mid-year coordination meeting of the 41st Ordinary Session of the Executive Council:
“I urge stakeholders and potential public and private investors to accept and back Africa’s Common Position for Energy Access and Just Transition and support the African Union’s various energy security initiatives. They are needed to develop technical and financial instruments and packages to fast-track Africa’s right to universal access to affordable and reliable electricity,” added Dr Abou-Zeid.
The principle behind the strategy is to ensure the acceleration of universal access to energy and transition, without damaging development initiatives.
Undeniably, reliable and stable energy is critical for Africa’s economic development and growth. “To meet the demands of its growing and urbanizing population, Africa must have a cost-effective, reliable and stable supply of energy,” said Vincent Obisie-Orlu, a natural resource governance researcher at the Africa Policy Research Institute.
“The continent's energy needs require the deployment of different sources — a diverse mix of geothermal, nuclear, wind, hydro, solar and natural gas. Doing so ensures that the power grids of African countries are resilient to shocks.”
Mr. Obisie-Orlu attributes energy poverty in Africa to inadequate and poor planning, poor regulatory frameworks for electrification, underperforming state-owned enterprises, lack of investment in infrastructure and poor maintenance of existing energy and electricity infrastructure.
Experts, however, share the view that resolving Africa’s energy poverty will require greater collaboration between African countries on developing energy infrastructure.
“Success also will require greater availability of foreign direct investment,” said Mr. Obisie-Orlu, adding, “Development financial institutions, such as the AfDB, will come in handy for supporting the energy and electricity infrastructure.”
Improvements in the regulatory framework for electrification and power pricing, in addition to better functioning of state-owned enterprises, will also support the goal of addressing energy poverty.
“With COP-27, in Sharm-El-Sheikh, only a few weeks away, Africa reiterates its commitment to the Paris Climate Agreement,” Senegalese President Macky Sall told the 77th session of the UN General Assembly in New York in September. Ms Sall is also the current Chair of the African Union.
He added: “At the same time, we wish to reach a consensus for a fair and equitable energy transition, as was called for at the Africa-Europe Summit last February, at the enlarged session of the G7 Summit in June and recently at the Africa Adaptation Finance Forum in Rotterdam.”
The abiding message is that at COP27, African countries must prioritize energy security and the development of a stable and reliable energy mix that will support the continent's commitments to the Paris Agreement.
