Africa: An Energy Giant on the Rise



Africa has tremendous opportunities in the energy sector, but significant investments are needed to facilitate energy production.

Decentralized energy solutions and renewable energy generation have a particularly bright future.



1. Regional differences in energy production


We have previously looked at energy policy in Europe, in particular Franco-German and German-Russian relations. In this section, we would like to take a closer look at Africa’s energy policy. In doing so, we will look at the different regional centers of the continent. Sub-Saharan Africa is also concerned with securing electricity supplies, which are not guaranteed everywhere.

It is therefore all the more important that the energy reserves of African countries are used as efficiently as possible. In recent years, we have become more aware of the importance of water, waste and energy issues. Water, waste and energy issues are all interrelated. In Africa, waste management plays an important role and can be a good means of generating electricity. The construction of waste incineration plants is being strongly promoted in Africa. Just recently, a brand new waste incineration plant was opened in Ethiopia, which produces electricity from the waste generated in the capital Addis Ababa.


2. Africa has a bright future for decentralized power generation.


When talking about electricity and heat generation, heat demand will be lower than electricity demand. South Africa may be an exception. But that depends on the region. Right now, the focus is really on electricity. Most African countries are much larger in size than European countries. European countries are much smaller, and waterways are easily accessible for transporting goods. The size of African countries leads to higher investment costs. Higher investment costs mean longer project horizons, which means these projects require high returns. These projects are often attractive to larger investors, but may not be as suitable for smaller investors. 

The focus is on these large projects because they justify the cost of transmitting electricity over such enormous distances. These long distances significantly increase the price per KWh for the customer. Often the price per KWh is too high for customers, so solar energy may be a better option. This is especially true for hydropower projects, which require enormous amounts of capital

Therefore, decentralized solution concepts are necessary to let energy production grow quickly. For this reason, the focus is often on solar energy and power generation from biomass. Nevertheless, the benefits of bioenergy should be evaluated in the context of available hydrocarbon resources. Energy from biomass can be a long-term solution, especially if the biomass is used for the production of fuels. Brazil is a good example of what is possible. Brazil is now a leader in ethanol production from sugarcane.

The main reason why solar works so well in African countries is that production costs have dropped so much. We have now achieved grid parity in many cases. This makes it possible to use this technology on a large scale and without direct connection to the power grid. The high levels of solar radiation in countries close to the equator mean that capacity utilization is high all year round, which would not be the case in Europe. Photovoltaic systems are ideal for almost all African countries


3. Abundant fossil fuel reserves in Africa


It should also be noted that energy reserves will continue to play an important role in Africa’s energy supply in the future. But these reserves must also serve the development of African countries.

Some countries on the African continent, particularly Angola, Libya and Nigeria, have significant oil and gas reserves. In the case of Nigeria and Libya in particular, political instability in these countries is leading to a significant reduction in energy production levels and is also affecting production rates and foreign investment in new facilities.

We discussed the political and moral implications of mismanagement of Africa’s energy resources in more detail in an article entitled “Heart of Darkness“.


Many thanks for the shared interest in the energy world!



This article is just meant to inform the reader of recent developments in the energy industry at large and to share knowledge and insights with a wider audience. The author does not put forth investment recommendations. This article should not be taken as investment advice and the author cannot be held to account for investments made. For more information, please refer to the Legal Disclosure and Privacy Policy, which you can click on or find at the top of this page in the menu bar. 

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