Can investors unlock Africa’s potential?

South Africa’s notorious southeasterly wind, the Cape Doctor, has colleagues across the continent.

March 18, 2021

South Africa’s notorious southeasterly wind, the Cape Doctor, has colleagues across the continent. Due to the strong winds in Africa, a 2020 report by the International Finance Corporation said the continent could theoretically house up to 59,000GW of onshore wind farms.

This would be enough to power Africa’s current energy needs 250 times over. But even based on more feasible figures, Africa has a long way to go to achieve its wind potential, according to the Global Wind Energy Council (GWEC).

GWEC highlighted this in a webinar this month, ahead of the launch of its annual report next week. It showed 724MW of onshore wind farms were completed in Africa in 2020, led by South Africa (515MW), Senegal (104MW) and Morocco (92MW). That is up 35% year-on-year in annual installations, bringing total installed wind in Africa to 6.5GW.

However, those numbers don’t scratch the surface of its potential. What are the challenges for investors seeking to unlock the wind potential of Africa’s emerging countries, and how might they be overcome?

Maximising potential

George Aluru, board member of the Electricity Sector Association Kenya, said there were a number of “minor issues” that are holding back wind’s growth in sub-Saharan African countries. These include land rights, regulatory regimes built for oil and gas firms, supply chains, unstable grids, and a lack of demand.

Each of these factors alone could present a hefty roadblock for investors – and many countries in sub-Saharan Africa experience a series of them.

Aluru said this is why established markets including South Africa are “running ahead of the pack” when compared to fellow nations in the rest of Africa.

South Africa leads the continent with total wind capacity of 2.5GW, ahead of North African nations Egypt (1.5GW) and Morocco (1.3GW). The largest wind market in the sub-Saharan region is Ethiopia, with 324MW of installed capacity, and many of the other wind markets in this region are dominated by large one-off wind projects.

For example, Lekela Power last year completed the 104MW Taiba N’Diaye project in Senegal, which accounted for all of the country’s installed wind capacity in 2020 and made it the second largest country for installations last year. Meanwhile, Kenya holds the record for Africa’s largest wind farm: the 310MW Lake Turkana project.

So how can sub-Saharan countries bring in more investment?

One aspect noted in the webinar was that political will is fundamental. Investors in sub-Saharan Africa need governments to simplify the wind farm permitting process, land rights, and adjust market frameworks and regulations that have been “geared for oil and gas”. Then the private sector can work with government to unlock the market.

Leading markets

We are already seeing the importance of political support in Africa’s leading wind markets.

In South Africa, the continued growth of wind is being driven by energy demand and the needs of an economy that is larger than nations in sub-Saharan Africa. After a difficult history rolling out more renewables, South Africa’s leaders plan to decommission fossil fuel plants and replace them with renewables and battery storage.

This year, South African President Cyril Ramaphosa issued a request for proposals for 2.6GW of wind and solar. The government is set to follow this with quarterly procurement rounds that will divvy up as much as 14GW of wind over the next ten years, under the country’s Renewable Energy Independent Power Producer Procurement Programme.

Meanwhile, in the north, Morocco has established itself as a major wind player in the region, undeterred by a low-key year in terms of new installed capacity, which totalled only 92MW in 2020. The country has steadily developed its wind industry since 2010 and has 1.3GW of total wind capacity.

Furthermore, with ambitions for 50% renewable energy by 2030, we can expect to see major increases in installations in Morocco in the coming years despite a slow 2020.

Emerson Clarke, Africa task force coordinator at GWEC, said: “Now is the time to urgently scale up wind power in the region, and use the technology as a driver of local jobs and investment to power a green economic recovery from the pandemic.”

According to GWEC, Africa is only taking advantage of 0.01% of its theoretical wind potential. While Africa’s 59,000GW potential is impressive if unfeasible, nevertheless, investors will want to make inroads into that remaining 99.99%.

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