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Africa’s GDP can quadruple by 2040, but with only a 50% rise in energy demand
A new dawn in energy resilience may come to Africa if there is a sizable move to renewable energy
Africa has the potential to expand the continental economy fourfold, but by implementing the right policies, energy demand need only expand by 50% according to a new report by the International Energy Agency (IEA), which had its first public presentation of the report at the second African Investment Forum in Johannesburg, South Africa.
The Africa Energy Outlook 2019 found that Africa’s future energy prospects look bright, but only if governments can make the shift to more renewable energy sources. The report says there are three main factors that will determine the continent’s future energy consumption, namely its growing population that will number more than 2 billion people by 2040, the rapid increase in urbanization and industrialization.
Kieran McNamara, an analyst at IEA, who presented the findings in Johannesburg, noted that these will have “profound effects on Africa’s energy mix and how the economy develops.”
The projected energy mix needed for Africa will be very different from the current one, with countries moving away from biomass and fossil fuels to renewable sources of energy.
[Africa GDP Energy graph: Source IEA]
The IEA has for the first time conducted detailed modelling of the energy mix for 11 countries in Sub-Saharan Africa, namely Angola, South Africa, Democratic Republic of Congo, Kenya, Tanzania, Ethiopia, Côte d’Ivoire, Mozambique, Nigeria and Senegal.
Today, 600 million people in Africa do not have access to electricity and 900 million lack access to clean cooking facilities. The use of biomass fuel for cooking leads to half a million premature deaths that could be avoided as households move to clean cooking. Current plans would leave 530 million people on the continent still without access to electricity in 2030, falling well short of universal access, a major development goal.
If policy makers put a strong emphasis on clean energy technologies, solar photovoltaic (PV) could become the continent’s largest electricity source in terms of installed capacity by 2040.
Natural gas, meanwhile, is likely to correspond well with Africa’s industrial growth drive and need for flexible electricity supply. Today, the share of gas in sub-Saharan Africa’s energy mix is the lowest of any region in the world.
[Graph Africa population 2040: Source IEA]
That could be about to change, especially considering the supplies Africa has at its disposal: it is home to more than 40 per cent of global gas discoveries so far this decade, notably in Egypt, Mozambique and Tanzania.
Africa also needs to radically increase its investment in power generation from the current $30 billion to $120 billion by 2040, if it is to achieve universal access to electricity, according to Tae-Yoon Kim, another analyst at IEA.
If countries on the continent do not change current policies on energy use, Africa will not achieve the African Development Bank’s target of universal electricity by 2030.
The African Development Bank and the IEA, an autonomous agency aiming to improve the world’s energy markets, participated in a high-level side event during the African Investment Forum 2019. Other participants included the European Commission, the African Union Commission and the African Energy Commission.
[Graph Electricity generation 2040: Source IEA]
Discussions were based on the African Development Bank’s “Light Up and Power Africa” strategy, through which the bank hopes to build knowledge of the African energy sector, and assist in achieving universal access to electricity on the continent.
Governments, utilities, regulators and investors will hopefully use this knowledge to help them grow energy sectors, while reducing costs. The availability of quality data will improve African countries’ abilities to make informed energy policy decisions and to provide private investors with valuable market analysis.
Through the New Deal on Energy for Africa (NDEA), the Bank has positioned itself to lead Africa’s energy transformation. The NDEA is a partnership-driven effort launched in 2016, which aims to achieve universal access to electricity in Africa by 2025.
The Africa Investment Forum (AIF) brings together project sponsors and investors, borrowers, lenders, policy makers and public and private sector investors, to promote Africa’s investment opportunities.
Helmo Preuss in Johannesburg, South Africa for The BRICS Post
