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

While these structural barriers to universal energy access and renewable energy transition are common among African countries, each country has its own political ambition and socio-economic starting point that will take them down different paths in the energy transition4. In the end, the actual pace and eventual outcomes will be partly determined by each country’s current dependence on fossil fuels, existing levels of industrial productivity, evolving technology choices, and the depth and diversity of domestic supply chains (IRENA, 2020)5 .

Currently, however, feedback loops and synergies between energy, industrialisation and development are apparent throughout the continent as the design and manufacture of most renewable energy equipment, along with high-value service inputs, reside in a handful of non-African countries. During 2018, three-quarters of patents related to the renewable energy sector were filed in just four countries (China, the United States, Japan and Germany). To date, few African countries have managed to successfully integrate the high-value-added segments of renewable energy value chains and generate associated employment (IRENA, 2022). As a result, many African countries remain consumers rather than producers of low-carbon technologies, limiting the creation of jobs and other socio-economic benefits relating to construction, operations and maintenance.

4 Suggesting the need for a differentiated approach to universal, reliable electricity access and a low-carbon future 5 Other relevant factors will include regional and national transition plans, institutional structures, capabilities and policy ambitions, as well as the political will and commitment required to overcome systemic opposition to reform efforts that challenge existing political economies.