The AfCFTA and Transformative Industrialisation • WORKING PAPER
3. Barriers to green energy development in Africa To realise their renewable energy potential, African countries need to take advantage of cost-effective technologies and double up investments in the sector. It is estimated, for instance, that the continent’s current average annual investments in energy systems need to double by 2030 – to approximately $40-65 billion if sustainable and reliable energy for all is to become a reality (KfW et al., 2021). It is argued, therefore, that the investments made to address the severe economic consequences of the Covid-19 crisis in Africa must spur the continent’s transition towards a sustainable energy future; otherwise, the continent risks a relapse into unsustainable economic patterns. However, even as the transition to renewable energy in Africa has become need of an hour, there are existing common structural barriers
to renewable energy development that, when unaddressed, will impede a sustainable energy future (KfW et al. 2021; Amir & Khan, 2022). These include i) a lack of capacity in key institutions, which leads to weak sector planning and management; ii) weak or absent regulatory and legal frameworks, which makes private investment in renewable energy expensive, and in some cases unviable; iii) electricity grids with high loss rates and limited capacity to absorb variable renewable generation; iv) in some instances, the high costs of decentralised solutions such as mini-grids; and v) financially unsustainable grid and service providers (e.g., utilities and mini-grid operators) that are unable and/or not incentivised to expand access, undertake required maintenance or invest in guaranteeing the security of supply (KfW et al., 2021).
Box 1: Barriers to low carbon electricity sectors and universal energy access in Africa
Barriers to low carbon electricity sectors • High risk makes raising financing for renewable energy projects difficult and costly • Regulatory and legal frameworks for private sector investments are lacking • Integrating large amount of renewable energy is challenging in the absence of power system flexibility • Fossil fuel plants currently under construction will have economic lifetimes beyond 2050 • Electricity is wasted due to high T&D losses and energy inefficiencies • Existing hydropower operates at reduced capacity due to lack of maintenance and reinvestments Barriers to universal energy access • Economic incentives for utilities to connect new customers are limited • Raising financing for grid expansion and electrification is challenging • Off-and mini-grid options are often not economically sustainable • Electricity supply is often unreliable • High connection cost prevent customers from connecting • Relevant authorities have limited capacity for electrification
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