Experts: Africa Needs to Make Energy Policy Right for Private Investment

ADDIS ABABA – Having the “right” legal framework and business environment for private investment is a critical first step to accelerate electricity access and energy transition in Africa, experts say.

At least 568 million people in Africa currently live without access to electricity, according to a 2022 UN report.  More than 170 million people also need access to clean cooking technologies.

“We must close the energy access gap,” said Robert Lisinge, Acting Director Private Sector Development and Finance Division at Economic Commission for Africa (ECA). The climate goal of 1.5 0C warming calls for significant changes in how energy is produced and consumed globally and in Africa, he noted.

The African Union last year adopted a common position that seeks natural gas, green and low carbon hydrogen and nuclear energy to play a crucial role in expanding modern energy access in the short to medium term while enhancing the uptake of renewables in the long term for low carbon and climate-resilient trajectory.

Investment in sustainable energy

A meeting held on the sidelines of the High-Level Political Forum on Sustainable Development in New York this week discussed private sector investment participation in accelerating electricity access and renewable energy development in Africa.

In his opening, Lisinge said Africa needs to rapidly scale up investment in clean and renewable energy to seize much of the 8,000 GW of added clean energy sources expected globally by 2030.

This, however, needs the right framework to attract private sector financing, he said at the event that also focused on accelerating energy transition and building further resilience in addressing the negative impacts of the pandemic on SDG7.

According to Lisinge, the crises of COVID-19, the war in Ukraine, energy and macroeconomic stability and climate change have pushed African economies to the edge and increased vulnerability. 

The challenges must be confronted without “losing sight of required investments for sustainable development, economic and social transformation and long-term prosperity,” Lisinge said.

Africa’s power sector needs an annual investment of $90 billion until 2030 if the continent is to meet key energy demands, per African Development Bank.

Regulatory and policy reforms to attract private sector

Experts proposed the Public-Private Partnerships and Promote innovative financing as way forward to meet the huge investment need.

There is an immense need for investment in Africa’s electricity sector, said Andrea Renzulli, Head of Policy and Regulation at the RES4Africa Foundation, 

The continent’s electricity demand represents 2% of global electricity demand, and this is expected to quadruple by 2040. And yet the continent has received the least investment in the electricity sector as regulatory frameworks in many African countries do not allow private sector participation in some parts of the electricity value chain, Renzulli said.

Currently, Africa generates only 4% of the global energy despite having, among others, 60% of the best solar resources worldwide, and more than 5000 billion cubic meters of natural gas discovered, to date.

“We need to update legislative and regulatory systems and put in place incentives to attract private sector investment in cutting edge power sector projects,” ECA economist Anthony Monganeli Mehlwana said. “We also need to raise the profile of clean cooking in Africa as we have done with solar energy.”