Africa is set to become a clean energy hub of the future

The UAE will host Cop28 this year, as the global community aims to work together to deliver the energy transition, mitigate climate change, and ensure that collectively we are able to support our economies and provide energy access to all.

Delivering on this global ambition will require collaboration, investment and the rapid deployment of clean energy technologies in both mature and emerging markets. Global renewable power capacity is now expected to grow by 2,400 gigawatts over the next few years, an amount equal to the entire power capacity of China today. Investment in renewable energy will need to hit $1.3 trillion a year by 2030 for the world to be on track to limit global temperatures set out in the Paris climate accord.

More needs to be done to support emerging markets, many of which are in Africa, if they are to realise their clean energy potential. Africa currently has 147GW of installed capacity, a level comparable to the capacity China installs in one or two years. From this installed capacity, about 45 per cent is located in South Africa, with another 15 per cent allocated to mining projects, mainly in the Sahel.

The continent is experiencing two major energy challenges. The first is delivering energy access to the 600 million people who lack electricity, and second replacing inefficient coal-fired power plants that are now entering the end of their life cycle.

Africa has tremendous renewable energy potential – 7,500GW of solar and 1,800GW of wind. Tapping into this clean energy potential would be transformational for the continent, however according to data from the International Renewable Energy Agency, only 2 per cent of global investments in renewable energy in the past two decades were made in Africa.

We are now beginning to see a shift in the market. Supported by new market mechanisms and policy frameworks, we are seeing foreign investors in partnership with infrastructure banks inject investment into developing clean energy project across Africa. By 2030, according to the International Energy Agency, Africa could produce 80 per cent of the new power generation it needs from solar, wind, hydropower, geothermal and other renewable energies.

This momentum is being reflected in the project tenders becoming available across the continent for wind and solar projects. Through its Integrated Resource Plan, South Africa alone has opened tenders for about 7GW for wind, solar and energy storage projects. With renewable energy being either cheaper or on par with traditional generation, many countries across Africa have set aggressive renewable targets.

In the private sector, mining companies and other heavy energy users are switching to renewable energy because it makes business sense. Amea Power is in discussion with several of the heavy industry players across the continent to deliver renewable energy projects, as it brings a number of advantages compared to traditional solutions – including reduced operational costs, price security and increased energy reliability. To access capital on the international markets, a number of these firms have increasingly stringent ESG targets to meet, so adopting renewable energy allows them to reduce emissions and the environmental impact of assets, without affecting operations.

In many cases, heavy users of energy do not have to fund the capital for renewable energy projects as independent power producers such as Amea Power will build, own and operate the projects and sell electricity directly to the user.

The growth of renewable energy across Africa could lead it on a path to become a global clean energy hub of the future and support the emergence of the new green hydrogen sector.

Hydrogen, produced today primarily from coal and natural gas, will shift towards renewable energy as wind and solar become the dominant forms of energy generation. The global market for hydrogen is valued at several hundred billion dollars with its applications spanning from agriculture, metalworks, glass production and electronics manufacturing.

A recent study by the European Investment Bank, International Solar Alliance and the African Union revealed that Africa could produce 50 million tons of green hydrogen a year by 2035 using solar power. This would drive hydrogen costs below $2.16 a kilogramme, and secure global energy supplies.

The production of green hydrogen would serve both the domestic market to support Africa’s agriculture industry, which accounts for about 23 per cent of the continent’s gross domestic product, along with the international markets in Europe, Asia and the Americas.

Amea Power is rapidly expanding its investments in wind, solar, energy storage and green hydrogen across the continent. The company has a project pipeline of more than 6GW across 20 countries, including 1GW of wind and solar projects that are under construction in Egypt.

In November 2022, on the sidelines of Cop27 in Sharm El Sheikh, Amea Power signed a framework agreement to develop a large-scale green hydrogen project that will serve as a feedstock for the production of green ammonia. The plant will be developed in two 500MW phases and once completed will be able to produce 800,000 tonnes of green ammonia a year for export. The company has signed agreements to conduct feasibility studies for several other large-scale green hydrogen projects across Africa.

It is clear that renewable energy is presenting emerging economies across Africa with the opportunity to unlock investment, create jobs and deliver energy access, however more will need to be done to accelerate the delivery of projects.

For Africa to realise its full clean energy potential, countries across the continent will need to collaborate and leverage their strengths. To support the green hydrogen sector, it wouldn’t be surprising, for example, to see certain countries becoming the producers of green hydrogen by maximising their renewable resources, while other potentially neighbouring countries, becoming distributors of green hydrogen to the international market.

Several North African countries are well suited to become major clean energy exporters to Europe, due to their location. The electricity grids of Morocco and Spain are already connected with solar power being exported to Europe. Aiming to replicate this approach, Egypt is exploring the possibility of exporting 3GW of power to the European grid through an underwater electrical line to Cyprus and Greece. In Tunisia, companies intend to deliver clean electricity to Europe, via Italy.

What is evident is there isn’t one determining factor driving demand for clean energy in Africa; it is being driven by a range of social, environmental and economic factors. Meeting these needs will transform the landscape of the continent by opening up investment, jobs creation and greater access to energy.

During this transition, there will be unforeseen challenges and pitfalls to overcome, but for the early movers that take the risk, establish the right partnerships and nurture the necessary in-country skills, these project developers will gain a competitive advantage in a market that is set to grow exponentially over the next decade.