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RENEWABLE ENERGY MARKET ANALYSIS

AFRICA AND ITS REGIONS

IN COLLABORATION WITH

2

DISCLAIMER

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recommended by IRENA or AfDB in preference to others of a similar nature that are not mentioned. The designations

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978-92-9260-417-2

IRENA and AfDB (2022), Renewable Energy Market Analysis: Africa and Its Regions, International Renewable

Energy Agency and African Development Bank, Abu Dhabi and Abidjan.

Available for download:

www.irena.org/publications For further information or to provide feedback: info@irena.org© IRENA 2022

ABOUT IRENA

The International Renewable Energy Agency (IRENA) serves as the principal platform for international co-

operation, a centre of excellence, a repository of policy, technology, resource and financial knowledge, and a driver

of action on the ground to advance the transformation of the global energy system. A global intergovernmental

organisation established in 2011, IRENA promotes the widespread adoption and sustainable use of all forms of

renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit

of sustainable development, energy access, energy security, and low-carbon economic growth and prosperity.

www.irena.org

ABOUT AFDB

The African Development Bank Group is Africa"s premier development finance institution. It comprises three

distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria

Trust Fund (NTF). On the ground in 41 African countries with an external office in Japan, the Bank contributes

to the economic development and the social progress of its 54 regional member states. www.afdb.org 3

RENEWABLE ENERGY MARKET ANALYSIS

AND ITS REGIONS

Africa is at a crossroads. For many of the people of this vast and diverse continent, access to affordable, clean and

sustainable energy remains an aspiration. The need for better and more abundant energy is evident in many walks of life,

from households relying on dirty fuels for cooking and farmers lacking energy to harvest their crops, and from health

clinics struggling to power operating rooms to businesses contending with power outages. Climate change is fast adding

new challenges in the form of extreme weather events, rising temperatures and more variable rainfall.

We know that renewable energy can help to resolve many of these social, economic, health and environmental

challenges. Renewables are key to overcoming energy poverty, providing energy services without damaging human

health or ecosystems, and enabling sustainable socio-economic development. As this report shows, a transition to a

renewables-based energy system in Africa promises substantial gains in GDP, employment, and human welfare in each

of the continent"s constitutive regions.

Although Africa"s share of global renewable energy investments and capacity installations remained relatively small over

the past decade, the continent can draw on a vast wind, solar, hydro, and geothermal resource potential. Falling costs are

increasingly bringing renewables within reach, whether through grid extension, mini-grids or stand-alone applications.

A profound energy transition centred on renewables and energy efficiency is increasingly understood as not only feasible

but essential for a climate-safe future in which sustainable development prerogatives are met. In fact, a sophisticated

understanding of the intimate connections between the energy system and the economy at large is essential in designing

policies, along with an appreciation of the ways in which both are linked to the world"s ecosystems and human wellbeing.

Experience around the world gives us a strong sense of what it takes to succeed. As this report makes clear, African

policymakers can draw on a wealth of experience in planning, financing, and deploying renewable energy projects, and

integrating them into energy systems. But as is true in other parts of the world, it is critical that each African country play

to its own strengths and understand its weaknesses, whether in terms of its industrial capacities, commodity and trade

dependencies, or skills base. Countries can and must learn from each other. Intra-regional and broader international

cooperation can overcome drawbacks any individual country may face on its own.

A wide-ranging challenge demands a comprehensive policymaking approach. This report illuminates the array of policy

areas that may contribute to a successful energy transition. But rather than picking policies selectively, they all need to

be part of an overarching, holistic framework that is more than just the sum of its parts.

The growing discourse on a Green Deal in places like Europe and North America has spotlighted the importance of a bold,

systemic approach. A Green Deal will of necessity look different in Africa, tailored to its own circumstances. But the key

point is its transformative nature: pursuing synergies in resolving pressing social, economic, health, and environmental

issues, recognising that because market-driven approaches alone will not suffice strong public interventions are needed,

and placing people at the centre of the transition. The objectives of Africa"s energy transition are far-reaching economic diversification; the creation of decent jobs; environmental stewardship and climate resilience; and universal access to affordable, reliable, sustainable and modern energy. A comprehensive policy package, as detailed in this report, must be underpinned by strong institutions and adequate financial resources, assisted by international collaboration, and supported by communities on the ground. This report offers policymakers and the interested public a wealth of data, insights, and policy recommendations. It is my hope that it will also prove to be an inspiration, helping to spark the energy transition and driving the continent"s sustainable development.

FOREWORD

Director-General, IRENA

4 RENEWABLE ENERGY MARKET ANALYSIS: AFRICA AND ITS REGIONS

BACKGROUND AND

SOCIO-ECONOMIC

OVERVIEW

AFRICA"S ENERGY

LANDSCAPE

TABLE OF CONTENTS

Annex A

Annex B

1.1 THE ECONOMIC CONTEXT .....................

1.2 TRADE, COMMODITY DEPENDENCE AND

INDUSTRIAL DIVERSIFICATION

1.3 DIFFERENCES BETWEEN ENERGY

IMPORTERS AND EXPORTERS ................

1.4 HUMAN DEVELOPMENT AND THE

SUSTAINABLE DEVELOPMENT GOALS .......

1.5 CONCLUSION ...................................

2.1 ENERGY IN AFRICA -

A CROSSREGIONAL OVERVIEW ...............

2.2 NORTH AFRICA .................................

2.3 WEST AFRICA ..................................

2.4 EAST AFRICA ...................................

2.5 CENTRAL AFRICA ..............................

2.6 SOUTHERN AFRICA ............................

2.7 CONCLUSION ...................................

TACKLING THE

ENERGY ACCESS

DEFICIT IN AFRICA

THE WAY FORWARD

06 07

RENEWABLE ENERGY

FINANCE IN AFRICA

SOCIO_ECONOMIC

IMPACTS OF THE ENERGY

TRANSITION IN AFRICA

0305

POLICY FRAMEWORK

FOR THE ENERGY

TRANSITION

04

3.1 TRENDS IN RENEWABLE ENERGY

INVESTMENT IN AFRICA .......................90

3.2 SOURCES OF FUNDING FOR

RENEWABLES IN AFRICA .....................106

3.3 MANAGING RISKS AND MOBILISING

CAPITAL ........................................125

3.4 CONCLUSION ..................................134

4.1 ENABLING POLICIES ..........................139

4.2 DEPLOYMENT POLICIES ......................158

4.3 INTEGRATING POLICIES ......................185

4.4 STRUCTURAL POLICIES FOR A JUST

AND INCLUSIVE TRANSITION ................187

4.5 CONCLUSIONS AND

RECOMMENDATIONS ..........................200

5.1 IMPACTS ON GDP UNDER 1.5-S ..............209

5.2 IMPACTS ON JOBS UNDER 1.5-S .............222

5.3 WELFARE EFFECTS ...........................233

6.1 THE ENERGY ACCESS DEFICIT:

A CLOSER LOOK ...............................246

6.2 RAISING ACCESS TO ELECTRICITY

USING DISTRIBUTED RENEWABLES .........250

6.3 CLEAN COOKING WITH RENEWABLE

ENERGY SOLUTIONS ..........................269

6.4 PRIORITY ACTION AREAS TO REACH

UNIVERSAL ACCESS TO MODERN

FORMS OF ENERGY ...........................278

7.1 THE OPPORTUNITIES INHERENT IN THE

ENERGY TRANSITION .........................284

7.2 THE POWER OF COMPREHENSIVE POLICY ...285

7.3 SCALING UP FINANCE ........................287

7.4 BRIDGING THE GAP IN ACCESS

TO MODERN ENERGY .........................288

7.5 THE PROMISE OF AN AFRICAN

GREEN DEAL

...................................289 6 RENEWABLE ENERGY MARKET ANALYSIS: AFRICA AND ITS REGIONS

LISTS OF FIGURES, TABLES AND BOXES

Figure 1.1 Overview of the evolution of key economic indicators in Africa and its regions ............16

Figure 1.2

Manufacturing value added (MVA) in

Africa and its regions ........................17

Figure 1.3

Overview of employment indicators in

Africa and its regions ........................18

Figure 1.4

Evolution of imports and exports across

Africa, by sector, 2000-2019 ................20

Figure 1.5

Composition of exports, by region, 2019 ......20

Figure 1.6

Socio-economic indicators based on

energy exports/imports .....................25

Figure 1.7

Evolution of key socio-economic

indicators by African region ..................27

Figure 2.1

Total primary energy supply in Africa,

by source, 2008-2018 ........................32

Figure 2.2

Total primary energy supply in Africa

and its regions, by source, 2018 ..............33

Figure 2.3

Electricity generation mix in Africa,

by source, 2010-2019 ........................35

Figure 2.4

Electricity generation in Africa,

by energy source, 2019 ......................36

Figure 2.5

Installed renewables-based generation

capacity, 2011 2020, and capacity additions, 2019-2020 ........................37

Figure 2.6

Installed hydropower generation capacity,

Africa, 2020 .................................38

Figure 2.7

Hydropower potential and installed

capacity, Africa ..............................39

Figure 2.8

Total capacity of existing, committed,

planned and candidate hydropower plants in Africa ..............................40

Figure 2.9

Africa: (a) average annual global

horizontal irradiation; (b) most suitable areas for utility-scale solar PV ................41

Figure 2.10

Solar PV potential and installed capacity,

Africa .......................................42

Figure 2.11

Africa's installed solar generation

capacity, 2020 ..............................42

Figure 2.12

Africa: (a) average annual wind speed; (b)

most suitable areas for utility-scale wind ......43

Figure 2.13

Wind potential and installed capacity,

Africa .......................................44

Figure 2.14

Installed wind generation capacity,

Africa, 2020 .................................44

Figure 2.15

Total final energy consumption in Africa

by sector and source, 2018 ...................46

Figure 2.16

Final energy consumption in Africa and

its regions by sector, 2018 ....................47

Figure 2.17

Access to electricity and clean cooking

fuels in Africa, 2019 ..........................49

Figure 2.18

African population served by off-grid

renewable power, 2009-2019 ................50Figure 2.19

Trends in biogas production in Africa,

2009-2019 ..................................51

Figure 2.20

North African countries in total primary

energy supply, 2018 .........................53

Figure 2.21

Access to electricity and clean cooking

fuels in North Africa, 2019 ....................54

Figure 2.22

Total primary energy supply in North

Africa, by source, 2018 .......................55

Figure 2.23

North Africa's electricity generation mix,

by source, 2010-2019 ........................56

Figure 2.24

Electricity generation in North Africa,

by source, 2019 ..............................56

Figure 2.25

North Africa's electricity generation

capacity by country and source, 2020 ........57

Figure 2.26

Most suitable areas in North Africa for

utility-scale solar PV and wind ...............58

Figure 2.27

North African population served by

off-grid renewable power, 2009-2019 ........59

Figure 2.28

Top five West African countries in total

primary energy supply, 2018 .................60

Figure 2.29

Access to electricity and clean cooking

fuels in West Africa, 2019 ....................61

Figure 2.30

Total primary energy supply in

West Africa, by source, 2018 .................62

Figure 2.31

West Africa's electricity generation mix,

by source, 2010-2019 ........................62

Figure 2.32

Electricity generation in West Africa, 2019 ....63

Figure 2.33

Electricity generation capacity in West

Africa, by country and source, 2020 ..........64

Figure 2.34

Most suitable areas in West Africa for

utility-scale solar PV and wind ...............65

Figure 2.35

West African population served by

off-grid renewable power, 2009-2019 ........66

Figure 2.36

Access to electricity and clean cooking

fuels in East Africa, 2019 .....................67

Figure 2.37

Top five East African countries in total

primary energy supply, 2018 .................68

Figure 2.38

Total primary energy supply in East Africa,

by source, 2018 ..............................69

Figure 2.39

East Africa's electricity generation mix,

by source, 2010-2019 ........................70

Figure 2.40

Electricity generation in East Africa,

by source, 2019 ..............................70

Figure 2.41

Electricity generation capacity in East Africa,

by country and source, East Africa, 2020 .....71

Figure 2.42

Most suitable areas in East Africa for

utility-scale solar PV and wind ...............72

Figure 2.43

East African population served by off-grid

renewable power, 2009-2019 ................73

Figure 2.44

Access to electricity and clean cooking

fuels in Central Africa, 2019 ..................74

Figure 2.45

Top five Central African countries in total

primary energy supply, 2018 .................75

Figure 2.46

Total primary energy supply in Central

Africa, by source, 2018 .......................75

7

FIGURES; TABLES AND BOXES

Figure 2.47

Central Africa's electricity generation mix,

by source, 2010-2019 ........................

Figure 2.48

Electricity generation in Central Africa,

by source, 2019 ..............................

Figure 2.49

Electricity generation capacity in Central

Africa, by country and source, 2020 ..........

Figure 2.50

Most suitable areas in Central Africa for

utility-scale solar PV and wind ...............

Figure 2.51

Central African population served by

off-grid renewable power, 2009-2019 ........

Figure 2.52

Top five Southern African countries in total

primary energy supply, 2018

Figure 2.53

Access to electricity and clean cooking

fuels in Southern Africa, 2019 ................

Figure 2.54

Total primary energy supply in Southern

Africa, by source, 2018 .......................

Figure 2.55

Electricity generation mix in Southern

Africa, by source, 2010-2019 .................

Figure 2.56

Electricity generation in Southern Africa,

by source, 2019 ..............................

Figure 2.57

Electricity generation capacity in Southern

Africa, by country and source, 2020 ..........

Figure 2.58

Most suitable areas in Southern Africa for

utility-scale solar PV and wind ...............

Figure 2.59

Southern African population served by

off-grid renewable power, 2009-2019 ........

Figure 3.1

Cumulative and annual renewable energy

investments in Africa by technology (excluding large hydropower), 2000-2020

Figure 3.2

Renewable energy investments in Africa

based on the five-year moving average against 2010 baseline, 2010-2020 ............

Figure 3.3

Shares of renewable energy investment

in Africa by technology (excluding large hydropower), 2005-2020 ....................

Figure 3.4

Annual renewable energy investments

in Africa by region (excluding large hydropower), 2000-2020

Figure 3.5

Top recipient countries of renewable

energy investment, 2010-2020 ...............

Figure 3.6

Annual commitments to off-grid renewable

energy and number of annual transactions, by region, 2010-2020 ........................

Figure 3.7

Shares of annual commitments to off-grid

renewables, by region, 2010-2020 ...........

Figure 3.8

Annual commitments to off-grid renewables,

by energy use, 2010-2020 ..................

Figure 3.9

Annual commitments to off-grid renewables,

by energy product, 2010-2020 ..............

Figure 3.10

Public commitments for energy in Africa, by

technology and renewable share, 2000-2019 ...

Figure 3.11

Cumulative public commitments in energy

sector by region, 2010-2019 ..................

Figure 3.12

IPPs in Africa: Installed capacity, 2000-2020. . .

Figure 3.13

DFIs' contribution to IPP energy finance,

compared with other sources, 2000-2020 ....Figure 3.14

DFIs' contribution to IPP energy finance

by technology, 2000-2020 ...................

Figure 3.15

Scaling Solar contractual and guarantee

structure in Zambia ..........................

Figure 3.16

Shares of public/private commitments to

off-grid renewable energy, by region,

2010-2020 ..................................

Figure 3.17

Shares of commitments to off-grid

renewable energy, by type of investor and region, 2010-2020 ..........................

Figure 3.18

Annual commitments to off-grid renewable

energy, by investor region, 2010-2020 .......

Figure 3.19

Shares of cumulative commitments to

off-grid renewable energy, by region and financing instrument, 2010-2020 ............

Figure 4.1

Comprehensive policy framework for a just

and inclusive energy transition ..............

Figure 4.2

Overview of deployment policies by region ..

Figure 4.3

Power sector structures in Africa ............

Figure 4.4

Number of IPPs in Africa by procurement

method and year of financial close ..........

Figure 4.5

Renewable energy feed-in tariff prices in

African countries ...........................

Figure 4.6

Renewable capacity awarded through

auctions in Africa, 2010-2020 ................

Figure 4.7

Results of selected auctions in Africa, and

global weighted average prices resulting from auctions, 2010-2020 ...................

Figure 4.8

Auctions in Africa cancelled or delayed,

2010-2020 .................................

Figure 4.9

Average years taken for an IPP to come

online after financial close ..................

Figure 4.10

Overview of structural change policies. . . . . . .

Figure 4.11

Industrial policies for local value addition ....

Figure 4.12

Key education and skilling priorities .......

Figure 4.13

SE.ED initiatives in support of youth

employment and skills development .......

Figure 5.1

Measuring the socio-economic footprint

of the energy transition ...................

Figure 5.2

Comparison of 1.5-S and PES and their

drivers: Effects on African GDP, 2021-2050

Figure 5.3

Effects on output by sector in Africa,

percentage difference between 1.5-S and

PES, selected years ........................

Figure 5.4

GDP percentage difference between

1.5-S and PES for Africa and its regions

(2021-2050 average)

Figure 5.5

GDP in African regions, percentage

difference between 1.5-S and PES by driver, 2021-2050 ..........................

Figure 5.6

Climate damages on GDP under PES:

World, Africa, and African regions,

2020-2100 ................................

LISTS OF FIGURES, TABLES AND BOXES

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