Why does Africa only receive 2% of global clean energy investment?

Although Africa boasts enormous renewable energy potential – solar, hydro and wind energy resources exceed those of the most developed countries – in 2024 it will receive only 2% of global clean energy investment.

This modest allocation highlights the critical disparity hindering Africa’s progress towards a sustainable energy future. Energy access challenges in sub-Saharan Africa remain a major obstacle to development.

A staggering 77% of the population lacks access to reliable electricity, hindering economic growth, education and meeting basic human needs such as lighting and cooling.

Achieving UN Sustainable Development Goal 7 (SDG 7) – universal access to affordable, reliable and sustainable energy – requires a significant expansion of renewable energy sources.

Renewable energy provides a clean, reliable and potentially cheaper alternative to traditional fossil fuel-based power generation, which is often expensive and contributes to local air pollution.

Despite contributing less than 3% to global greenhouse gas emissions, Africa bears the brunt of the severe impacts of climate change.

Droughts, floods and extreme weather events disrupt agricultural production, threaten food security and displace communities. Using renewable energy is not only a solution to cleaner energy, but also a matter of survival for millions of Africans.

By moving away from fossil fuels, Africa can reduce its contribution to climate change and build resilience to its effects.

Despite the urgent need and enormous potential, the International Energy Agency (IEA) estimates that achieving Sustainable Development Goal 7 in Africa will require a staggering investment of $25 billion per year.

However, this goal remains elusive due to various barriers. The high cost of capital for energy projects in Africa, combined with limited financing options and investment risks perceived by international investors, creates a significant investment gap.

Additionally, policy instability and regulatory hurdles in some African countries further deter potential investors. Innovative solutions are needed to fill this gap and unlock the potential of renewable energy in Africa. It is essential to address systemic challenges that hinder investment, such as policy instability and regulatory obstacles.

Governments can create a more attractive investment environment by establishing clear and stable policies, streamlining permitting processes and providing incentives for renewable energy projects.

Financial institutions also play an important role. Early-stage capital and financial instruments tailored to renewable energy projects in Africa, such as loan guarantees and risk-sharing mechanisms, can attract private investment.

Additionally, the use of blended finance, which combines public and private funds, can reduce project risk and encourage greater private sector participation.

Africa’s renewable energy potential and lack of investment is a clear example of global inequality. It calls on the world to act to recognize Africa’s potential and invest in its renewable energy future.

Solving this problem will benefit everyone. Africa receives clean, reliable energy that stimulates development and helps fight climate change.

The world gains a more stable and prosperous Africa and a decline in global greenhouse gas emissions. Together we can unlock Africa’s renewable energy potential and create a better future for all. Check out additional details about this article in this post: https://www.Irena.Org/How-We-Work/Africa.