Introduction

Africa is a sleeping giant when it comes to renewable energy, endowed with abundant energy resources, including solar, wind, hydro, and geothermal resources. According to the 2024 EY Africa Attractiveness Report, renewable energy accounted for about 50% of total Foreign Direct Investment (FDI) inflows into Africa in 2023, demonstrating the continent’s major role in global renewable energy generation. To really appreciate this keen interest from investors in Africa’s renewable resources, let’s pull back the curtain and understand the continent’s renewable resources potential.

Africa's Renewable Energy Resources and Potential Growth Areas

Renewable energy is the new cornerstone of Africa’s energy future, with the continent’s energy capacity projected to surge from 180 gigawatts (GW) by 2030 to an astonishing 1.2 terawatts (TW) by 2050. This transition is more than just a shift in power sources; it’s a catalyst for the continent’s economic transformation and according to Sustainable Energy for All, has the potential to generate between 8 and 14 million high-quality jobs.

The rapid adoption of renewable energy can be attributed to falling costs, making these technologies more accessible than ever. For instance, the levelized cost of electricity (LCOE) for solar PV has dropped by nearly 90%, from $400/MWh in 2011 to just $41/MWh in 2022, making solar an increasingly affordable and viable option for Africa. In fact, Africa’s vast solar potential alone could generate over 10 TW, while wind and hydro could contribute an additional 3 TW and 2.5 TW, respectively. These numbers tell a compelling story: Africa isn’t just catching up; it’s positioning itself to lead the global energy transition.

The Critical Role of FDI in Africa’s Renewable Energy Space

FDI has and continues to play a crucial role in Africa’s renewable energy revolution. Given the continent’s constrained domestic financing, FDI has become the lifeblood of large-scale energy projects, breathing new life into Africa’s transition to sustainable power. In 2021 alone, Africa attracted about $13 billion in renewable energy investments, with South Africa, Egypt, Morocco, and Kenya reaping significant benefits from international capital to develop wind, solar, and geothermal infrastructure.

A prime example of FDI’s transformative impact is South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which has unlocked billions of dollars in foreign investment, financing nearly 60% of the country’s solar and wind power projects. Similarly, Kenya’s successful geothermal project demonstrates the pivotal role of external funding. With an estimated 10,000 megawatt (MW) of untapped geothermal potential, Kenya has harnessed international expertise and financing, particularly from the World Bank and the Japanese government, to develop the Olkaria Geothermal Power Station, solidifying its position as Africa’s largest producer of geothermal energy.

Beyond infrastructure development, FDI is also a job creator. The renewable energy sector, particularly solar and wind, has been an employment powerhouse. Egypt’s Benban Solar Park, for instance, is projected to create over 6,000 jobs post-construction.

Moreover, renewable energy investments serve as Africa’s frontline defence against climate change. Projects like Morocco’s Noor Ouarzazate Solar Complex are significantly reducing carbon emissions and advancing global sustainability goals. Therefore, as Africa positions itself as a major player in the global energy transformation, FDI remains the fulcrum to ensure that the continent not only keeps the lights on but also leads the charge toward a greener future.

At first glance, Africa’s vast renewable energy potential might suggest an abundance of readily accessible electricity to its people. Nothing can be further from the truth. In fact, over 43% of the continent’s population lacks access to electricity, and the energy landscape is fraught with aging infrastructure, frequent power outages, and high electricity tariffs. Recognizing this urgency, African Heads of State, alongside private sector leaders, civil society, and development partners, including the World Bank Group and the African Development Bank Group, recently convened at the Mission 300 Africa Energy Summit in Tanzania, to outline strategic measures to expand electricity access to 300 million people across the continent by 2030. Plus, the growing private investor interest in Africa’s energy sector, can be leveraged to bridge the continent’s energy access gap, particularly through decentralized solar solutions that extend power to remote and underserved communities.

Case Studies of Successful Renewable Energy Projects

Several landmark projects stand as success stories of how FDI is reshaping Africa’s energy landscape and driving sustainable development. One of such examples is the Noor Ouarzazate Solar Complex in Morocco, a $9 billion investment co-financed by the World Bank and the European Investment Bank. As one of the world’s largest solar power plants, this 580 MW facility has the capacity to electrify over a million homes. The project also plays a critical role in Morocco’s ambition to generate 52% of its electricity from renewables by 2030, while serving as a major employer in the country.

Kenya’s Lake Turkana Wind Power project is another testament to FDI’s impact. As the largest wind energy project in East Africa, this 310 MW wind farm was financed by the African Development Bank, Standard Bank, and several European investors. By reducing Kenya’s reliance on fossil fuels, the project has helped stabilize energy costs and has created local employment opportunities, fostering regional development.

Ethiopia’s Gibe III Hydroelectric Dam, with a capacity of 1,870 MW, is one of Africa's largest hydropower projects. Funded through a mix of government resources, private sector investment, and international financing, the dam is central to Ethiopia’s ambition of becoming a regional energy hub, generating substantial revenue through electricity exports to neighbouring countries.

The Benban Solar Park in Egypt, Africa's largest solar park, is another testament to how FDI can revolutionize a country’s energy sector.  As the largest solar park in Africa, with a total capacity of 1.8 GW, Benban is expected to provide clean energy to nearly one million homes while reducing annual carbon emissions by two million tons. The project also created tens of thousands of jobs during its construction phase, and it continues to offer long-term employment opportunities in operations and maintenance.

Conclusion

Africa's renewable energy transformation is no longer just a dream; it is a reality being built, one megawatt at a time. With a sustained inflow of FDIs, declining costs, and ongoing and successful large-scale projects in Africa’s renewable energy space, the continent is on the brink of an energy renaissance. By harnessing the power of investment, strategic partnerships, and innovation, Africa cannot only bridge its energy gap but also emerge as a global leader in clean energy.