Investing in energy in Africa. Beginning of a new investment cycle: the opportunistic time for an early mover with a long-term vision?
Investing in renewable energy in Africa offers a substantial market opportunity due to very low electricity access rate, especially in Sub-Saharan Africa. The continent has immense untapped potential for solar, wind, hydropower, geothermal, and battery storage, yet only 67 GW of renewable capacity is installed, mostly in North Africa and RSA.
Though the African investment landscape is complex and high-risk, investors often overlook its diversity and apply high-risk ratings uniformly across all nations, known as the “Africa premium”.
As a result, Investment in African energy has slowed significantly over the past decade as international investors lose enthusiasm, particularly in Sub-Saharan Africa outside RSA. OECD-based funds, major international energy companies and European independent power producers are among those.
The Sub-Saharan African energy investment ecosystem, excluding RSA, now mainly depends on long-term players: Development Finance Institutions (DFIs), a few international players like TotalEnergies, regional infrastructure and PE funds, and regional platforms with gigawatt-scale portfolios.
Despite this contrasting picture, significant investments in energy are expected in the mid-term, particularly in Sub Saharan Africa. In the meantime, E-CUBE Strategy Consultants believes it is an opportunistic moment for an early mover to position themselves for the long-term in what is currently perceived as a “buyer’s market”.
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