Achieving Universal Energy Access in Africa amid Global Decarbonization

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A short, spoken-word summary from CSIS’s Gracelin Baskaran on her brief with Sophie Coste, “Achieving Universal Energy Access in Africa amid Global Decarbonization.”

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The Issue

Africa is the most energy-deficient continent in the world, as it hosts 75 percent of the world’s population without access to electricity.[1] Universal access to electricity and clean cooking remains an elusive goal for most states in the region: in 2022, 600 million people lacked access to electricity on the continent, 98 percent of them located in sub-Saharan Africa.[2] There is an urgent need for intervention given Africa’s population of 1.4 billion is forecasted to reach 2.5 billion by 2050, which, when coupled with rising incomes and urbanization, will lead to a significant increase in energy demand.[3] This brief provides six evidence-based insights on Africa’s energy landscape before providing five recommendations on reaching universal energy access amid global decarbonization.

Africa’s Energy Landscape

Energy is a significant impediment to economic development in Africa. In 2022, 546 million people in Africa lived in poverty—roughly half of the continent’s population—indicating an urgent need to drive economic growth by creating employment, an endeavor that is impossible without energy access.[4] The continent consumes a disproportionately low amount of energy, accounting for less than 6 percent of global energy consumption despite hosting 18 percent of the world’s population.[5] When excluding South Africa, sub-Saharan Africa’s per capita energy consumption is just 180 kilowatt hours (kWh), compared to 6,500 in Europe and 13,000 kWh in the United States.[6] There is an urgent need to increase the supply of clean energy given Africa’s rapidly growing population. The following are six evidence-based insights on Africa’s energy landscape; these insights provide the foundation for the recommendations on how to reach universal energy access in a way that is most congruent with the world’s emission reductions goal.

Insight 1: Demand is significantly outstripping supply, and the energy crisis is deepening.

Much of the progress made in the past five years toward increasing access to electricity has been reversed due to population growth outpacing electrification rates, supply chain disruptions, and the economic consequences of the Covid-19 pandemic for both households and governments.[7] In 2021, there were 4 percent more people in sub-Saharan Africa without access to electricity compared to 2019.[8] Meanwhile, almost three-quarters of Africa’s population does not have access to clean cooking facilities. Recent spikes in liquefied petroleum gas (LPG) prices have made this option unaffordable for nearly 30 million people in Africa, forcing many to switch back to polluting cooking fuels.[9]

Some of the fastest-growing African countries have the highest levels of energy poverty. Nigeria and the Democratic Republic of the Congo (DRC) are among the five fastest-growing countries in the world. Nigeria has been experiencing an energy crisis for decades, leaving 90 million people without access to electricity. The country has the highest level of absolute energy poverty in the world and accounts for 12 percent of the global energy access deficit.[10] This deficit has continued to grow over time, increasing by 7 million people over the past decade. Energy inequality also remains pervasive; 84 percent of urban areas have access to power, compared to 26 percent of rural ones.[11] Likewise, the DRC has one of the lowest energy access rates in the world—just 20 percent of its population is projected to have access to modern energy by 2030. It is home to the third-largest population in the world without electricity access.[12] A significant consumer disparity exists within the country, where just 1 percent of the rural population has access to modern energy, compared to 41 percent of the urban population.[13]

Without significant intervention, Africa’s energy supply will not keep pace with the rising demand stemming from increasing urbanization, economic growth, and a rapidly growing population. Africa’s 1.4 billion population is forecasted to reach 2.5 billion by 2050, at which point the continent will be home to five of the eight most populous countries, with Nigeria surpassing the United States to become the third-largest country in the world.[14] These countries will struggle to economically develop and reduce poverty without energy.

Insight 2: Africa is an energy paradox—rich in energy resources but the most energy-poor continent due to its dependence on resource exports.

Africa has significant reserves of minerals, oil, and gas. On the minerals front, Africa is home to over 80 percent of the world’s manganese, platinum, and chromium; roughly half of the world’s cobalt; and a fifth of the world’s graphite.[15] These resources are critical for deploying renewable energy technologies and electric vehicles. However, these minerals are not being used for domestic consumption; instead, nearly all extracted minerals are exported for processing, manufacturing, and consumption elsewhere.

On the fossil fuels front, Nigeria, Angola, Libya, and Algeria feature among the top 20 producers of oil globally, leaving them vulnerable to falling oil demand.[16] Overall, 10 out of 54 states on the continent are considered “fossil fuel dependent,” defined as having more than 60 percent of the value of merchandise exports come from the fossil fuel industry.[17]

Exploration in sub-Saharan Africa has been productive. Estimates of oil and gas reserves have increased by over a factor of 10 since 1980.[18] Africa was home to nearly 40 percent of global gas discoveries between 2010 and 2020.[19] This includes discoveries in Mozambique, Tanzania, Egypt, Senegal, and South Africa.[20] It now holds roughly 13 percent of the world’s natural gas reserves.[21] Africa’s natural gas industry has significant untapped potential, with over 5,000 billion cubic meters of natural gas discovered but not yet approved for development. Still, fossil fuel efforts on the continent have accelerated in the past few years. In 2023, South Africa’s Ministry of Forestry, Fisheries and the Environment gave French company TotalEnergies approval to drill offshore for oil and gas.[22] TotalEnergies spent $300 million—or half of its global exploration budget—in Namibia in 2023, while the UK-based Shell has drilled four exploration wells along Namibia’s coast since 2021—leading some to suggest that Namibia could become the world’s newest petrostate.[23]

The majority of oil and gas investment in the region comes from international companies and is exported, thereby limiting domestic consumption.[24] Africa exports 80 percent of its crude oil and 45 percent of its natural gas.[25] For example, Mozambique has 100 trillion cubic feet of proven natural gas reserves—the third-largest natural gas reserves in Africa. In 2022, Mozambique sent its first shipment of liquefied natural gas to Europe, despite gas contributing just 1 percent of the country’s electricity supply.[26] This is particularly troubling given just 40 percent of the country’s population has access to electricity.[27] The focus on exports is largely because resource-rich African countries are seeking export revenue and firms want reliable offtake countries that are consistently willing to pay for oil and gas.

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Figure 1

Insight 3: Weak, unreliable, and aging infrastructure is a binding constraint to improving energy access.

States have struggled to build the infrastructure required to strengthen energy security. For example, Nigeria’s energy sector has drastically deteriorated on the back of weak infrastructure. Between January 2010 and June 2022, there were 222 partial or complete grid collapses. These collapses are a product of grid instability owing to demand exceeding supply, volatile loads from industrial users such as steel mills, old infrastructure, and the unavailability of most transition lines.[28] In the face of these challenges, Nigeria needs significant investment to maintain reliable power supply. The U.S. International Trade Administration estimates that it will cost up to $100 billion over the next two decades simply to maintain current service in Nigeria.[29] The investment required to reach universal energy access would be exponentially more.

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Figure 2

South Africa experiences similar challenges. The country is profoundly shaped by “load shedding,” or rolling power outages that occur to prevent overloading the national power grid when demand exceeds production. Load shedding has been increasing since 2007, with power outages ranging from 2 to 12 hours per day in duration.[30] Load shedding is common: between January 1 and December 11, 2023, there were 332 days of load-shedding—over 99 percent of the time.[31] National energy production is highly emissions-intensive and concentrated in coal—85 percent, or about 42,000 megawatts (MW), is generated via coal-fired power stations, many of which are aging and poorly maintained.[32] Eskom, a state-owned enterprise, produces 95 percent of South Africa’s electricity; its energy availability factor—or the proportion of time it could produce electricity—has consistently declined over the past 10 years, from 75 percent in fiscal year (FY) 2014 to 58 percent in FY 2023, and is expected to stay below 70 percent in the medium term.[33] The power plants’ frequent breakdowns and maintenance problems are triggering widespread blackouts across the country.

McKinsey estimates that $400 billion of investment will be required to increase electricity transmission and distribution in Africa by 2050.[34] Decentralized renewable energy solutions, particularly standalone solar systems and mini-grids, have become more prevalent sources of electricity, especially in rural areas where grid expansion is commercially unviable. Africa was a recipient of 70 percent of the world’s off-grid investments between 2010 and 2020.[35] Nigeria, which has the highest absolute number of people in energy poverty worldwide, was the largest recipient in sub-Saharan Africa of off-grid renewable energy aid during this period, facilitated by the Nigerian Energy Regulation Commission’s launch of the Regulation for Mini-Grids in 2017, which created a transparent regulatory framework for mini-grid developers.[36]

Insight 4: High levels of debt have left countries with very limited public finance to invest in energy infrastructure.

Debt levels have drastically increased over the last decade; the average debt-to-GDP ratio in sub-Saharan Africa nearly doubled between 2013 and 2022, from 30 percent to 60 percent of GDP.[37] Additionally, debt servicing costs have gone up, owing partially to the fact that 40 percent of the continent’s debt is denominated in foreign currencies, which means that currency fluctuations can drastically increase repayment costs. In 2023, debt servicing costs were estimated to reach 17 percent of government revenues—the highest in 24 years.[38] This has drastically reduced the public finances available for improvements to the energy sector and other development priorities, including education and health.

Debt challenges are exacerbated by volatile revenue streams for resource-dependent economies. For example, Angola is reliant on oil revenue and has struggled to repay debt—including $42 billion in Chinese loans that were extended after the civil war in 2002 using future petroleum revenues as a guarantee for repayment. This approach proved effective until the decline in oil prices. In 2016, as oil prices plummeted from $115 per barrel to below $50 per barrel, Angola entered a recession, with five straight years of economic decline. Angola narrowly averted debt default amid the compounding challenges of low oil prices and the Covid-19 pandemic.[39] Consequently, Angola has inadequate public finance to invest in energy infrastructure. On average, 43 percent of Angola’s urban population and less than 10 percent of its rural population have access to energy.[40]

The mining sector has financed energy generation across the continent. However, most existing power generation has been directed and financed by mining companies to supply their own operations. For example, the third phase of the DRC’s Inga Dam project is expected to generate 4,400 MW—but most of this will be used to power the copper mines and smelters in Haut-Katanga Province. Just a third of the power would be allocated to power nearby Kinshasa.[41]

Insight 5: Public utilities are often ill-equipped to meet energy needs.

Of the 54 countries in Africa, 25 have public utilities that monopolize the electricity sector without any private sector participation. The other 29 allow private sector participation to some degree. Only 10 countries—less than a fifth of the continent—have unbundled utilities featuring an independent transmission system operator or a statutory unbundled transmission system.[42] Given the large share of state-owned electricity companies, high levels of debt and limited fiscal capacity undermine the utilities’ ability to make public investments in energy infrastructure.

The International Energy Agency has noted that “expanding and modernising Africa’s electricity infrastructure requires a radical improvement in the financial health of public utilities.”[43] Staying solvent will require drastic reform to cost-of-electricity pricing to address the insolvency that continues to undermine gains in access and efficiency. Strengthening the financial health of these utilities also requires addressing financial mismanagement and corruption. In South Africa, infrastructure and coal supplies often face internal sabotage by individuals looking to contract repair work at inflated rates and theft by those looking to sell stolen parts. In 2023, the minister of finance exempted Eskom from “disclosing irregular spending in its audited financial statements” for a period of three years in an effort to build the company’s international credit rating.[44] These reforms can improve not only the solvency of utilities but also the fiscal health of the country. In South Africa, Eskom has received $16 billion in bailouts since 2008.[45]

In Kenya, mismanagement has adversely affected its two utilities: Kenya Power, which the government has a majority share in, for distribution and Ketraco, which is wholly state owned, for transmission.[46] Both have struggled with poor financial performance and rising debt levels. In Madagascar, JIRAMA, the state-owned electricity and water utility, has received significant fiscal subsidies to stay solvent.[47] Still, it has been unable to adequately increase energy access. The International Monetary Fund has flagged that limiting fiscal transfers to the energy sector can improve the country’s overall fiscal position.[48] In 2023, the World Bank stepped in to provide support to the government of Madagascar with a $400 million line of credit, which will support strengthening access to both energy and the internet. It is expected to increase energy access from 34 percent to 67 percent.[49]

Insight 6: The investment climate has disincentivized private capital in the energy sector.

Sub-Saharan Africa is a difficult region for the private sector to work in. In 2020, it averaged a score of 51.8 (out of 100) on the World Bank’s Doing Business index, which assesses the extent to which a country’s regulatory environment is conducive to private sector operations.[50] Sub-Saharan Africa ranks significantly below the Organization for Economic Cooperation and Development (OECD) high-income economy average of 78.4 and the global average of 63.0.

Africa only received 2.4 percent of global renewable energy investment between 2010 and 2020—of which three-fourths was concentrated in South Africa, Morocco, Egypt, and Kenya. Solar photovoltaic (PV) installations received $18 billion between 2010 and 2020, approximately a third of all renewable energy investment in the continent. Onshore wind projects received 31 percent of all investment, followed by solar thermal at 16 percent. The share of investment that went to solar technology increased from 2 percent in 2011 to 62 percent in 2012 and has stayed put in the 40–80 percent range, replacing bioenergy and small hydropower.[51]

There is alignment between countries with low levels of energy access and limited ability to mobilize private capital and those that perform poorly on the Doing Business rankings. For example, the DRC has largely been unable to attract private capital given it has one of the most challenging business environments in Africa and globally. In 2020, the DRC ranked 183 out of 190 countries for the ease of doing business. It ranked in the bottom 10 percent of countries worldwide for enforcing contracts, paying taxes, trading across borders, and getting electricity.[52] Current policies do not offer favorable investment conditions and remain ambiguous about issues such as ownership and concessions. Challenges with the creditworthiness of the offtaker utility, independent regulatory body, off-grid framework, high taxes, value-added taxes, and import duties have further disincentivized private capital mobilization.[53]

Africa’s energy crisis has become an impediment to doing business and mobilizing capital on the continent. As Table 1 shows, sub-Saharan Africa’s score for “getting electricity”—which the World Bank calculates by measuring the “procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse,” as well as the “supply reliability, transparency of tariffs and the price of electricity”—is the lowest in the world at 50.4 (out of a possible 100).[54] This is compared to 85.9 in OECD high-income countries, 75.1 in East Asia and the Pacific, and 71.7 in Latin America and the Caribbean. The cost of electricity in the region is 3,188 percent of income per capita—the highest of any region in the world and nearly 3.5 times as much as the next highest, South Asia; over five times higher than the East Asia and the Pacific region; and over seven times higher than Latin America, the Middle East and North Africa.[55] Many African countries that are in need of private capital to improve electricity are in a negative cycle: expanding access to, and reducing the cost of, electricity is key for improving the investment climate—but improving the investment climate requires improving access to affordable and reliable electricity.

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Table 1

Recommendations for Addressing Africa’s Energy Crisis

 

Recommendation 1: Leverage natural gas.

Despite differences across states’ energy and climate plans, the African Union’s (AU) Energy Transition Program promotes a unified vision of energy development on the continent based on access to affordable and clean energy.[56] The plan incorporates principles laid out by AU Agenda 2063, the UN Sustainable Development Goals, and the Paris Agreement on climate change. The Kigali Communique, developed by representatives from 10 states in 2022, lays out the requirements for a just and equitable energy transition in Africa and encourages international partners to align with its objectives.[57] The communique highlights the importance of natural gas as a transition fuel in the region.

Modeling by the International Energy Agency shows that universal energy access in Africa hinges on using both renewable energy and natural gas. However, investment in renewable energy in the region has been insufficient. Africa has only received 2.4 percent of it between 2010 and 2020.[58]

It is vital that universal energy access in Africa is achieved with the lowest emissions possible. Switching from coal to natural gas is an important mechanism for achieving both goals, given that gas emits roughly half the amount of carbon dioxide of coal when burned. The International Energy Agency has projected that leveraging Africa’s gas could result in an extra 90 billion cubic meters per year until 2030. With cooperation between governments and international companies, this gas can be used to both meet domestic demand and still be exported for revenue. The total carbon emissions from utilizing these gas resources over the next three decades is forecasted to be approximately 10 gigatons—which, when added to current emissions, would still amount to just 3.5 percent of the world’s emissions despite having a much larger share of the world’s population.[59] Additionally, new technologies can further reduce the emissions generated from natural gas.

Recommendation 2: Invest in clean energy sources.

Significant financing is required to ensure African states have universal access to modern energy while concurrently meeting their nationally determined contributions (NDCs) to the Paris Agreement. The International Energy Agency has stated that $200 billion per year in energy investment will be required to achieve this by 2030. This will require concessional financing; an estimated $28 billion is needed on an annual basis to mobilize $90 billion of private sector investment—10 times as much as current financing.[60] A concerted effort between governments, multilateral development banks, international donors, and the private sector is key to scale up clean energy investments.

Many African countries are prioritizing renewable energy development and setting up programs to procure capital from the private sector. In 2011, South Africa developed the Renewable Energy Independent Power Producer Procurement Program; since its inception, the program has procured 6.4 gigawatts from 112 independent power producers through seven bid windows—primarily in wind and solar.[61] In August 2022, the Nigerian government launched the national Energy Transition Plan (ETP), which aims to have the country generate 30,000 MW of electricity from renewable energy sources and reach carbon neutrality by 2060. This process is estimated to create 340,000 jobs in the coming decade.[62]

Kenya boasts one of the most advanced power sectors in sub-Saharan Africa and has made significant strides in enhancing household access to electricity. As a result of both public and private investment, Kenya’s electricity generation capacity grew by an average of 4.9 percent per year between 2013 and 2022 —exceeding its 4.5 percent real GDP growth rate during the same time frame.[63] In total, Kenya has experienced an electrification rate increase from 32 percent in 2013 to 75 percent in 2022. Although there is a disparity in energy access between rural and urban areas, it is smaller than most African nations, with urban energy access at 100 percent, contrasting with 65 percent in rural regions.[64]

Kenya serves as a success story of remarkable growth in renewable energy; about 90 percent of Kenya’s power comes from renewable energy, including geothermal, solar, and wind.[65] The country shifted its baseload power from hydroelectric to geothermal, which has made the energy system more drought resistant—a critical feature given how drought-prone the Horn of Africa is.[66] Kenya has been identified as one of the cheapest developers of geothermal power in the world. Although it currently has 863 MW of installed geothermal capacity, it has an estimated 10,000 MW geothermal energy potential. Still, Kenya is the world’s eighth largest geothermal producer and has the single biggest geothermal power plant.[67] Kenya also has a growing solar industry, with large potential given how much direct solar radiation the country receives throughout the year. In 2021, it added 120 MW of solar power to the grid, bringing total solar capacity to 172 MW with more projects due to come online in the next few years.[68]

Kenya also has a growing wind sector, which taps into its estimated 3,000 MW of wind power potential. The Lake Turkana Wind Power Station is the largest plant in Africa, generating 310 MW. The U.S. government, through the Development Finance Corporation, has also helped fund the Kipeto Wind Power Station, with turbines supplied by General Electric Energy.[69] Kenya has also created a long-term vision to develop nuclear power, with power production expected to start in 2035.[70]

Kenya’s success is a product of decades of private sector participation in the electricity sector through the independent power producer program it rolled out in the 1990s. The program gave 20-year power purchase agreements (PPAs) to private companies to supply Kenya Power, a partially state-owned enterprise. The PPA contract terms were investor-friendly but expensive for consumers and the government. There were two reasons for this. First, under the contracts, independent power producers were required to receive foreign-denominated payments regardless of whether the power was utilized. Given currency fluctuations, energy costs were volatile and susceptible to exchange-rate adjustment fees on monthly electricity bills. Second, the contracts were linked to fuel prices—so electricity bills were also vulnerable to price hikes when fuel prices increased. However, instead of terminating these contracts and deterring future investment, the government opted to let the contracts expire.

The country continues to have a public-private model for energy generation. The government of Kenya has a 70 percent stake in the Kenya Electricity Generating Company (KenGen), which contributes approximately two-thirds of the country's installed capacity, while the remaining share is owned by independent power producers. [71] The newer contracts for renewable energy—wind, solar and geothermal—have more consumer-friendly terms and have created more competitive pricing. Still, weaknesses exist with mismanagement of state-owned utilities, Ketraco and Kenya Power.[72]

Recommendation 3: Invest in grid, off-grid, and mini-grid infrastructure.

In the International Energy Agency’s Sustainable Development Scenario, three goals are concurrently reached: achieving the Paris Agreement’s commitment to keeping global warming below 2°C, reaching universal access to modern energy by 2030, and reducing energy-related air pollution and resulting illnesses and deaths. Grid, off-grid (also known as stand-alone), and mini-grid solutions have complementary roles to play in reaching these goals (Figure 3). Attaining universal energy access in sub-Saharan Africa will require building connections for 90 million people per year—a threefold increase from the current rate. Estimates vary on how this should be executed. Analysis by the International Energy Agency demonstrates that expanding national grids is the most economical approach for 45 percent of those getting energy access by 2030.[73] On the other hand, in rural areas, mini-grids can offer two key benefits.[74] First, they can provide access to communities that national grids currently cannot. Second, they can increase demand for electricity because the economic opportunities afforded by energy access coming from mini-grids can increase consumers’ ability to pay for electricity, incentivizing future grid expansion. The World Bank has estimated that bringing power to 380 million people in Africa will require spending $91 billion to build upward of 160,000 mini-grids. If mini-grid construction continues at its current pace, just 12,000 will be constructed by 2030—less than 10 percent of projected demand—at a cost of $9 billion.[75]

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Figure 3

Off-grid infrastructure is controversial. While it can offer quick access to affordable electricity where grid or mini-grid connections are not economically or technically viable, a large share of respondents in a 39,000-person survey conducted in 12 African countries reported that their off-grid electricity solution was insufficient for their power needs, including over 60 percent of Rwandans with off-grid systems.[76] Off-grid systems can power some lighting or charge a phone using solar, wind, or hydropower, but it remains highly limited. Thus, while such solutions have an important role to play in the medium term, it will be important to invest in grid infrastructure given that rapidly growing populations will increase demand for higher-energy systems.

Recommendation 4: Deregulate the energy sector.

Energy deregulation is critical to encouraging the private sector to invest.[77] This, in turn, can create competition, improve quality of service delivery, and reduce costs. It can also increase generation capacity and reduce system power losses, which adversely impact both public and private enterprises and reduce economic growth. Some African countries have moved toward deregulation. In 2021, South African president Cyril Ramaphosa, acknowledging the limitations of the state-owned provider, Eskom, announced private investors would be allowed to generate up to 100 MW of electricity without requiring a license.[78] Likewise, in June 2023, the government of Nigeria adopted the Electricity Act of 2023, which replaced the Electricity and Power Reform Act of 2005. The act introduced some key sector reforms, including de-monopolizing the power sector by allowing states, firms, and households to generate, transmit, and distribute their electricity.[79] As discussed earlier, Kenya’s success is a product of private sector participation in the electricity sector, alongside state-owned enterprises, since the 1990s.

Recommendation 5: Undertake necessary legal and regulatory reforms to help mobilize private capital.

Establishing and maintaining an effective enabling environment for public and private investment requires having a robust and transparent regulatory framework. As Power Africa points out, this should entail an autonomous and accountable regulatory institution with the explicit authority and capacity to carry out its responsibilities. Robust regulatory environments must define the responsibilities of public and private actors involved in the power sector to ensure accountability on both sides. This includes improving regulatory transparency around electricity tariffs and reducing investor risk by clarifying offtake agreements. Cost-of-service reforms to electricity pricing are also crucial; well-designed rate and tariff systems can ensure that public utilities are solvent and the private sector can operate profitably.[80] These reforms can de-risk investments and help achieve public policy goals on both the emissions and energy access fronts.

Gracelin Baskaran is the research director and senior fellow for the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Sophie Coste is a former intern with the CSIS Energy Security and Climate Change Program.

The authors thank Charles Chibambo for research input and advice on earlier drafts of this brief.

This brief was made possible by funding from Chevron.

Please consult the PDF for references.

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5Baskaran
Research Director and Senior Fellow, Energy Security and Climate Change Program

Sophie Coste

Former Intern, Energy Security and Climate Change Program