Sub-Saharan Africa’s Renewable Energy Journey: Commitments, Challenges, And Financial Flows – Report

Sub-Saharan Africa has witnessed significant regional commitments to renewable energy, driven by both historical long-term planning and the recent decline in technology costs, which have made renewable energy more competitive compared to conventional sources. These efforts have been bolstered by wider development plans, such as Agenda 2063: The Africa We Want, which emphasizes inclusive and sustainable economic growth, continental and regional integration, democratic governance, and peace and security.

At the regional level, dedicated centers have been established to support the transition to renewable energy and energy efficiency. These centers work in coordination with member countries, donor agencies, and international institutions to develop energy plans and roadmaps. For instance, West Africa aims to increase the share of renewables in its electricity mix to 48% by 2030, up from 35% in 2020. Similarly, Southern Africa has set targets to achieve a 39% share of renewables by 2030, up from 33% in 2020. However, these targets are non-binding and require swift translation into effective national policies to ensure their credibility and realize the benefits promised.

North African countries have also set ambitious renewable energy targets at the national level. They have formed the Regional Center for Renewable Energy and Energy Efficiency (RCREEE) in collaboration with other members of the League of Arab States. The Pan-Arab Sustainable Energy Strategy – 2030, which was expanded from the Pan-Arab Strategy for the Development of Renewable Energy 2010-2030, aims to achieve a 12.4% share of renewables in the electricity mix. This strategy includes an implementation plan with 17 programs, focusing on shifting Arab electricity markets towards higher shares of renewables, ensuring necessary investments, mitigating risks, and integrating smart services and quality assurance schemes.

In West Africa, the ECOWAS Renewable Energy Policy (EREP), adopted in July 2013, sets targets to increase the share of renewable energy in the region’s electricity mix to 35% by 2020 and 48% by 2030. This policy is complemented by the ECOWAS Energy Efficiency Policy, which aims to make available 2,000 MW of power generation capacity through efficiency gains. Following the adoption of these regional policies, all ECOWAS member states developed National Renewable Energy Action Plans and National Energy Efficiency Action Plans between 2014 and 2015, aligning with the regional targets declared in the EREP.

Public financial commitments play a crucial role in supporting renewable energy projects in Sub-Saharan Africa, given the challenges in attracting private capital due to financial, political, legal, and economic risks. Between 2000 and 2021, public financial institutions committed nearly USD 60 billion to renewables, with significant investments in hydropower, solar, wind, and geothermal projects. The largest commitments came from China, the International Development Association, the United States, and the International Bank for Reconstruction and Development. These investments go beyond energy assets and include feasibility studies, technical assistance, and training.

Public financial flows, particularly from international donors and financing institutions, have been successful in catalyzing private investment in the power sector. Investment funds and development finance institutions (DFIs) have played a key role in this process. West Africa received USD 17.5 billion in public commitments between 2010 and 2021, primarily for hydropower and solar projects. Similarly, East Africa received USD 17 billion, with significant investments in hydropower, solar, geothermal, and wind projects. Central Africa also saw increased public commitments to renewable energy, particularly in hydropower and solar projects.

To support the next phase of the off-grid renewable energy sector’s development, low-cost local currency financing will be preferred. Established companies are looking to finance their next development phase, while younger companies would benefit from low-cost capital to build profitable businesses and attract equity investors. In the absence of such financing, the burden may fall disproportionately on low-income households, as companies seek to maintain profitability and healthy cash flows.

Harnessing Sub-Saharan Africa’s largely untapped renewable potential can help bridge the energy deficit and create a more inclusive and sustainable energy system. The region has received significant renewable energy commitments at the regional, national, and city levels. However, realizing these commitments requires effective translation into national policies, mobilization of international public finance, and integration of renewable energy solutions with infrastructure development plans​.