Africa has large and growing energy needs which will require significant levels of investment.
Simultaneously there is an objective and major opportunity to build out sustainable energy
production on the continent from the beginning.
Africa’s energy needs could double by 2050 as its population grows over the next three decades
to 2 billion people. Currently, around 600 million Africans lack access to electricity, and this is
expected to rise to 1.2 billion by 2050. Similarly, while 920 million Africans lack access to clean
cooking, this could double to around 1.8 billion people in 30 years.
Industrialization will also drive Africa’s energy demand. A huge investment opportunity exists within the power sector with demand expected to grow six fold by 2050. To enable the electrification of Africa and reduce the carbon intensity of theenergy supply, a change in the mix in energy production capacity is needed.
Source: Mckinsey
According to Mckinsey there could be an increase in installed renewable capacity from around
200GW to 2200GW with the power system in 2050 comprised of 95 percent renewable sources.
Richly endowed with wind and solar resources, African countries in the north and southwest of
the continent could be highly competitive in supplying green hydrogen for local and global
consumption. Africa also has a significant opportunity to export green hydrogen.
By 2050, the continent could be self-sufficient for its full domestic demand potential of between 10 and 18megatons of hydrogen, while African hydrogen exports could reach around 40 megatons by 2050.
Natural gas is likely to play an important supporting role over the short to medium term by
providing flexible capacity as renewables scale up and battery storage becomes more cost-
effective. Demand for gas supply and infrastructure is, therefore, likely to continue to rise in the
short term.
To enable these dramatic shifts, around $2.9 trillion of cumulative capital expenditure would be
required between 2022 and 2050, most of which would need to be dedicated to green-energy
sources.
By 2050, the annual investment required is expected to more than double, reaching $160
billion, with 43 percent of capital expenditure spent on hydrogen, 38 percent on renewables,
and 17 percent on power transmission, distribution, and minigrids. Electricity transmission and
distribution would require a cumulative investment of around $400 billion by 2050 to increase
power generation and electrification, with the largest opportunities concentrated in Egypt,
Morocco, Nigeria, and Senegal.
Africa’s transition toward a greener energy mix presents a significant opportunity for investors
seeking to play a meaningful role in supporting the move to renewables and driving
development in the region. All sectors along the supply chain will have opportunities for
investment especially critical metals such as copper, graphite, lithium and other rare earths. Is
your portfolio of investments ready to benefit from the immense growth opportunities coming
out of Africa?