Sub-Saharan Africa needs an average investment of about $100 billion per year between 2024 and 2030 if the region is to align with the global target of tripling renewables by 2030, according to a new report by Climate Analytics, a global climate science and policy institute.
At COP28 last year in Dubai, governments agreed to triple global renewable capacity by 2030 – alongside doubling energy efficiency – as the world races to keep global temperature levels within 1.5C to avoid the worst impacts of climate change.
Climate Analytics’ new report, titled Tripling renewables by 2030: Interpreting the global goal at the regional level, breaks down what a 1.5C-aligned renewables rollout would look like at the regional level and calculates the associated investment, capacities and future needs.
Even though investments in renewables in the region have been growing since 2020, in 2023 they still only reached around $20 billion, meaning that sub-Saharan Africa’s investments need to grow five-fold to ramp up renewables twice as fast as the global average of $2 trillion needed per year – $8 trillion for new renewables and $4 trillion for grid and storage infrastructure.
Last year, global investments in renewables reached $1 trillion, which is around half of the average annual investment needed between 2024 and 2030. This means that the world is on track to invest $6.6 trillion in renewables and grids, leaving an investment shortfall of just over $5 trillion.
However, the report indicates that under current policies, governments are also set to invest over $6 trillion in fossil fuels between 2024 and 2030 – money that would potentially fill the current renewables financing gap.
“Shifting this money to renewables and grids could cover the investment gap entirely and put the power sector on track for 1.5ºC. Some regions are at risk of falling behind in the effort to triple renewables due to a chronic lack of investment and international support,” the report says.
Sub-Saharan Africa lags in per capita investment
The report found that per capita investment in renewables remains low in sub-Saharan Africa, reaching $125 per person by 2030, which is eight times less than in developed countries where investment is close to $1,000 per person.
“The need for such a vast increase in investment highlights the risk the region faces in falling behind in the transition to renewables due to a lack of finance,” the report reads in part.
Developed countries, which are historically responsible for the carbon emissions that have led to the current climate crisis, have for years been promising climate finance to countries in the Global South that are suffering the worst impacts of climate change – a crisis they are least responsible for – but these promises have largely not been met.
And yet, the cost of capital in Africa is estimated to be between two to three times that of advanced economies, which makes mobilising private finance on the continent quite challenging.
$28 billion in concessional finance could mobilise $90 billion
The International Energy Agency estimates that $28 billion in concessional finance could mobilise $90 billion in private investment on the continent, and the Climate Analytics report implores developed countries to make mobilising increased investment in Africa a renewed commitment to climate finance.
The report says it’s not practicable – or even fair – to assume that the $100 billion needed for sub-Saharan Africa’s green energy transition should come entirely from within the region, and that most of it should come from external sources in form of climate finance or foreign direct investment.
“With adequate funding, innovative sources of finance, and debt cancellation at scale, Africa can make the most of its renewable energy resources to achieve an equitable and rapid transition that lessens the worst effects of the climate crisis and expands access to energy across the continent,” said Burundi-based Landry Ninteretse, regional director of 350Africa.org, a global grassroots climate change movement.
“It is imperative that funds be redirected from harmful fossil fuels to renewable energy sources and that wealthy countries – which have historically been at the center of the climate crisis – provide financial support for the deployment of clean energy in developing nations,” he added.
Joab Okanda, Christian Aid Pan Africa senior advocacy advisor, said that the world is not in short supply of money to fill the renewables financing gap and transition to a low-carbon world, but the money is either flowing in the wrong direction or being spent on the wrong things.
“The push for the reform of the global financial architecture to deliver for people and the planet goes beyond Africa’s quest for debt forgiveness and access to affordable loans. It touches on a system that is so rigged against Africa that it loses $88.9 billion annually to illicit financial outflows. Correct this injustice, stop giving money to fossil fuel companies, stop subsidising coal, oil and gas with tax breaks and the continent is already able to bridge the investment gap on renewables,” he said.
The Climate Analytics report said that much more needs to be done to mobilise investment in renewables in less wealthy countries or else the pledge made by governments at COP28 to triple renewables “will ring increasingly hollow”.
Inequality in energy consumption
In the period between 2024 and 2030, Africa is projected to add 260 GW of new renewables compared with 2,900 GW in developed countries over the same period, mainly because the fossil fuel phase-out needs in sub-Saharan Africa are much less than those of developed countries.
In 2022, while sub-Saharan Africa had 60 GW of fossil capacity that needs to be retired by 2040, developed countries had almost 1500 GW installed that needs to be retired by 2035.
In addition, Africa’s demand of electricity is lower overall, at 1 MWh per person compared with close to 10 MWh per person in developed countries. However, the imbalance in energy consumption is projected to lessen by 2050 – but is expected to remain by the end of this century.
