The transition to green energy presents an unprecedented opportunity for African development. It offers a chance to reduce poverty and increase economic growth. To take advantage of this opportunity, there are three key areas to focus on. The first is improving political stability and the rule of law. The second is using blended finance to reduce project risks. The third is developing clear green-energy strategies, backed by comprehensive plans for transitioning the economy on a sector-by-sector basis. This paper focuses on the third area and aims to provide guidance for both governments and investors.
Meeting the Paris Agreement target of limiting global warming to 1.5°C will require an investment of USD200bn per year in Africa’s energy system by 2030, followed by USD370bn per year by 2050. The total investment opportunity between 2020-2050 is just over USD7trn.
Two subsectors are crucial to achieving net-zero emissions. First, Africa’s electricity production capacity will need to increase tenfold by 2050, requiring an investment of USD110bn per year by 2030, rising to USD190bn by 2050. Second, the African hydrogen market will need investment of USD2-3bn per year by 2030 and USD4-9bn by 2050. Africa has abundant resources and coastal access, making it an ideal location for becoming a central hub for the hydrogen-based global economy. It is worth noting that Nigeria is expected to receive significantly higher investment in hydrogen than most other major African economies, with USD2bn expected by 2040.