Renewable Energy Market Analysis: Africa and its Regions

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An energy system centred on renewable energy can help resolve many of Africa’s social, economic, health and environmental challenges. A profound energy transition is not only feasible, it is essential for a climate-safe future in which sustainable development prerogatives are met. Renewables are key to overcoming energy poverty, providing needed energy services without damaging human health or ecosystems, and enabling a transformation of economies in support of development and industrialisation.

Africa is extraordinarily diverse, and no single approach will advance its energy future. But efforts must be made to build modern, resilient and sustainable energy systems across the continent to avoid trapping economies and societies in increasingly obsolete energy systems that burden them with stranded assets and limited economic prospects.

This report from the International Renewable Energy Agency (IRENA) developed in collaboration with the African Development Bank (AfDB) sets out the opportunities at hand, while also acknowledging the challenges Africa faces. It lays out a pathway to a renewables-based energy system and shows that the transition promises substantial gains in GDP, employment, and human welfare in each region of the continent.

See the visual story: An African Green Deal to Deliver a Prosperous Future

Among the findings:

A large part of Africa has so far been left out of the energy transition:

• Only 2% of global investments in renewable energy in the last two decades were made in Africa, with significant regional disparities.
• Less than 3% of global renewables jobs are in Africa.
• In Sub-Saharan Africa, electrification rate was static at 46% in 2019 with 906 million people still lacking access to clean cooking fuels and technologies.

But the continent has enormous potential:

• Africa has vast resource potential in wind, solar, hydro, and geothermal energy and falling costs are increasingly bringing renewables within reach.
• Central and Southern Africa have abundant mineral resources essential to the production of electric batteries, wind turbines, and other low-carbon technologies.

The last decade has seen progress:

• Renewable energy deployment has grown in the last decade, with more than 26 GW of renewables-based generation capacity added. The largest additions were in solar energy.
• Average annual investments in renewable energy grew ten-fold from less than USD 0.5 billion in the 2000-2009 period to USD 5 billion in 2010-2020.
• Distributed renewable energy solutions, including stand-alone systems and mini-grids, are playing a steadily growing role in expanding electricity access in off-grid areas and strengthening supply in already connected areas.

Despite the difficult shift away from carbon-intensive energy sources, the energy transition – when accompanied by an appropriate policy basket – holds huge promise for Africa:

• The energy transition under IRENA’s 1.5°C Scenario pathway predicts 6.4% higher GDP, 3.5% higher economy-wide jobs and a 25.4% higher welfare index than that realised under current plans, on average up to 2050.
• Jobs created in the renewable energy transition will outweigh those lost by moving away from traditional energy. Every million U.S. dollars invested in renewables between 2020 – 2050 would create at least 26 job-years; for every million invested in energy efficiency at least 22 job-years would be created annually; for energy flexibility, the figure is 18.

For these benefits to materialise, the following will be required:

• A comprehensive policy package that combines the pursuit of climate and environmental goals; economic development and jobs creation; and social equity and welfare for society as a whole.
• Strong institutions, international co-operation (including South- South co-operation), and considerable co-ordination at the regional level.