- Africa is experiencing a surge in energy development, with both fossil fuel and renewable energy projects on the rise.
- Significant oil and gas discoveries have been made in recent years, while renewable energy investments are increasing rapidly.
- The continent aims to diversify its energy mix, but challenges remain in ensuring equitable access to energy and achieving sustainable development goals.
Several countries across the African continent are rapidly expanding their energy industries thanks to several factors. Firstly, many oil and gas giants are investing heavily in untapped fossil fuel regions across Africa as they strive to diversify their portfolios and produce more ‘low-carbon’ oil. Secondly, several high-income countries and multinational energy players are now investing in Africa’s renewable energy market, with multiple hydropower, wind and solar power, and hydrogen projects emerging across the continent. Thirdly, several African countries are seeing economic growth that is supporting greater energy security.
Oil, Gas, and Coal
Several oil and gas discoveries were made in 2024. Portuguese multinational energy corporation Galp, the National Petroleum Corporation of Namibia (NAMCOR), and the energy company Custos made a light oil discovery at the Mopane-1X well in Namibia in January. In April, Galp’s appraisal activities showed a potential oil reserve of at least 10 billion barrels. Shell also saw success in Namibia, confirming the presence of oil deposits at the offshore Enigma-1X well in April, the firm’s fifth oil discovery in Namibia’s Orange Basin.
Italy’s Eni confirmed the discovery of light oil, gas, and condensates in Block CI-205 offshore Ivory Coast in March 2024. E&P companies BW Energy and Panoro announced the discovery of oil at the DHBSM-2P pilot well offshore Gabon in May, which holds an estimated 5 to 6 million barrels of recoverable oil. Meanwhile, Chevron made a significant near-field oil discovery in PML 49, in the shallow offshore region of the Western Niger Delta in Nigeria, with an estimated production potential of up to 17,000 bpd.
The African region is gradually moving away from new coal- and gas-fired power plants, with new fossil-fuel capacity additions falling by more than 70 percent over the last half a decade. However, coal and gas continue to contribute around two-thirds of the continent’s annual power generation, and one-third of Africa’s fossil-fuel capacity is less than a decade old, with much of it having been built in response to the region’s rising electricity demand.
Renewables
In terms of renewable energy, the African Union aims to bring 300 GW of renewables online by the end of the decade, to more than quadruple the estimated 72 GW of installed capacity in 2024. Africa saw a record year for renewable energy investment in 2023, at around $15
billion, which represents 2.3 percent of the global total. This was over double the investment seen in renewables in Africa in 2022. Renewable energy deployments across the continent totaled 7.9 GW in 2023. However, to achieve the African Union’s 2030 target, annual deployments must increase to 32.5 GW a year for the rest of the decade.
The renewable energy capacity growth was driven by the development of utility-scale wind, solar, and geothermal projects in Egypt, Morocco, Kenya, and South Africa. Two-thirds of Africa’s installed wind and solar is currently situated in South Africa, Morocco, and Egypt suggesting the need for greater investment in renewables in other parts of the region. The growth of South Africa’s solar energy industry has helped the country tackle its energy crisis and regular power outages. The increased investment shows promise for greater funding in the renewable energy sector in the coming years, as well as the creation of a more diversified energy mix in several African countries.
External Funding
In addition to the private funding of projects, several regional funding initiatives were announced in 2024. There has been a rise in the number of Just Energy Transition Partnerships (JETPs) – multilateral platforms between developed and emerging economies that are designed to provide climate finance.
In 2023, the Presidential Climate Commission released the JET Investment Plan for South Africa, setting a funding target of $98.7 billion between 2023 and 2027 to support its energy security goals. Financing will contribute primarily to the growth of South Africa’s electricity, electric vehicle, and green hydrogen industries.
Senegal and the International Partners Group (IPG), comprising France, Germany, the EU, the U.K., and Canada, also announced a JETP in December, agreeing upon funding of $2.7 billion to support Senegal’s energy transition and develop its low-carbon economy.
At the recent COP29 climate summit in Azerbaijan, member states agreed to triple finance to developing countries, from the previous goal of $100 billion a year to $300 billion a year by 2035. This funding will help countries develop their renewable energy industries, as well as boost climate resilience. Although many developing countries and climate groups criticized the funding decision for being too low.
Outlook
Several African countries are seeing the rapid development of their fossil fuels and renewable energy industries, thanks to increased public and private investment. Although the continent continues to rely heavily on fossil fuels for power, multiple countries are now developing alternative sources to diversify their energy mix and boost energy security. The region has seen immense growth in its energy market in recent years, but some countries are vastly overshadowing others, with significantly more investment required in many countries to ensure greater energy security and support a global green transition.
By Felicity Bradstock for Oilprice.com