Accelerating energy infrastructure development in Africa

Tapping into the continent’s abundant energy resources necessitates a significant financial commitment; however, the opportunities for investors are attractive, and many are taking note.

As carbon-neutral initiatives and environmental protection are top priorities for many African governments, harnessing the continent’s capacity to produce renewable energy will catalyse critical improvements that help to transform Africa into a competitive, industrialised global player.

Attracting corporate investment to Africa

According to the World Economic Forum, clean energy investments in emerging markets and developing economies need to increase sevenfold by 2030 for climate change commitments to be met and the goal of netzero emissions to be achieved by 2050.

There has been a marked corporate commitment to transitioning to 100% renewable energy procurement throughout the UK, US and Europe. This trend is set to continue across all business and industrial sectors, with recent large-scale investments from European countries into African renewable energy projects serving as evidence.

Developing infrastructure: CPPAs are key

Corporate power purchase agreements (CPPAs) will play a critical role in helping to develop energy infrastructure in Africa.

A CPPA is a long-term power purchasing mechanism between electricity generators and corporate customers that allows customers to buy renewable energy. The outcome is a more certain wholesale price and reassurance for the generator that a predictable energy stream exists, helping to diversify risks and ease access to capital.

More importantly, developers are then incentivised to construct new renewable energy infrastructure without leaning on government tariffs. Of course, for CPPA solutions to take effect in Africa, certain barriers typical of emerging markets need to be tackled, for example:

• heavy regulation of power markets

• gating the wheeling of power through open grid access

• lack of transparency in issuing, tracking and certifying renewable energy certificates

• availability of local developers that can execute PPA transactions. The wider economic benefits of CPPAs are indisputable, and many African governments are open to and welcoming of such partnerships. This is because they recognise that increased deployment of renewable energy and security of supply creates more favourable conditions for trade and industry.

A stable energy environment will help the African corporate sector to meet global business standards and integrate with digital supply chains – all of which reinforce investor confidence.

Africa is breaking away from stereotypes

Dr Akinwumi Adesina, president, African Development Bank, made several important remarks at a recent international conference, highlighting that the African region has the lowest cumulative debt default rate, second to the Middle East.

This serves as evidence that infrastructure as an asset class in Africa is, in fact, not only secure but also profitable.

While the task of accelerating energy infrastructure development in Africa is a mammoth undertaking, with the combined efforts of investors, governments and local communities, Africa’s future is certainly a bright one.

The upcoming Africa Energy Indaba is set to empower attendees with insights to leverage significant opportunities that will ultimately accelerate Africa’s energy infrastructure, subsequently transforming the continent into a competitive, industrialised global player.

Africa Energy Indaba

The Africa Energy Indaba is the continent’s definitive energy event, providing an agenda that influences energy policy for Africa. Attended by government ministers and private sector decisionmakers, the prestigious event serves as the ideal platform for achieving Africa’s energy vision for a sustainable energy future and keeping abreast of global energy competitors in this dynamic landscape.

The Africa Energy Indaba 2023 will be a physical in-person event, with all conference sessions, side events and the exhibition taking place at the Cape Town International Convention Centre from 7 to 9 March.

The event has proven its success year on year, demonstrating extreme efficaciousness in addressing key issues impacting the African energy sector while devising solutions to best mitigate these pressing concerns.

Strategic partnerships with the African Union Development Agency and many leading African industry associations ensure the event is backed by leading energy drivers. The symposium provides invaluable business growth opportunities for the continent’s energy realm, subsequently inspiring much-needed transformation within the sector.