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Africa energy review 2021

The global race to net zero by 2050 is accelerating. Will Africa realise a just transition or become a stranded asset?

Overview

South Africa, 4 November 2021 - With an acceleration of the global net-zero journey, there is increasing focus on developing countries and their lack of affordability to meet such net-zero targets. A clear contrast is evident when considering Africa; as home to 17% of the global population, producing less than 5% of global annual emissions and accounting for only 3% of global cumulative emissions. 

Notwithstanding, the majority of Africa’s 54 countries (35) have made commitments towards net-zero emissions, but at an estimated required investment of $2.8 trillion to transition Africa’s current energy base away from fossil fuels by 2050, these investment levels are considered largely unaffordable to most African countries. This clear message has been given at COP-26 in Glasgow, through calls for increased international financial support from developed nations.

How will Africa deal with the double challenge of addressing Energy Poverty as well as Energy Transition? As global investment rapidly shifts away from fossil fuels which forms the bulk of investment and foreign income for many African countries, what scenario’s might play out as Africa tries to balance decarbonising economies but also keeping the “lights on”. 

As we update Africa's energy profile, it is evident that although fossil fuels still make up the bulk of Africa's energy inventories, growth in energy is dominated by renewables. With an annual growth rate of 21% between 2010 and 2020 and 33GW of renewable energy currently committed or under construction, this is positive news for Africa. The Covid-19 pandemic  resulted in a broad downturn across the oil and gas sector, especially in the Oil sector which was down circa 19% year on year. Liquified natural gas (LNG) projects have remained most resilient but there are increasingly broad challenges in raising finance for any fossil fuel embedded project. 

 

 

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Figure 1. Africa's current energy generation mix

Africa's current energy generation mix

Source: BP Energy Outlook 2020

On a country-by-country basis, however, continued exploitation of existing fossil fuel reserves, along with recent natural gas discoveries, could tempt some countries to disregard the benefits of a more diversified energy generation mix and remain entrenched in fossil fuels.

Africa’s energy mix has been relatively constant for the last 30 years and despite successful renewable energy projects, the overall scale of renewables in Africa remains very small. Africa’s current energy generation mix is dominated by fossil fuel generation with hydropower making the only meaningful renewable energy contribution. There has been a more recent shift within the renewable energy mix to accelerate solar and wind technologies but they remain small at 1.6%.

 

Contact us

Andries Rossouw

Andries Rossouw

Africa Energy, Utilities and Resources Leader, PwC South Africa

Tel: +27 (0) 11 797 4060

James Mackay

James Mackay

Energy and Infrastructure Strategy Lead, PwC South Africa

Tel: +27 (0) 11 797 5653

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