According to International Energy Agency (IEA) website publication on Renewables 2022 Analysis and forecast to 2027 report:
Financial guarantees facilitate utility-scale growth while new government programmes boost distributed solar PV
Sub-Saharan Africa’s renewable power capacity is expected to almost double with the addition of over 40 GW from 2022 to 2027. Five countries – South Africa, Ethiopia, Tanzania, Angola and Kenya – account for over 60% of all renewable capacity additions. Solar PV and wind make up the majority of capacity growth in the region, marking a technology shift as hydropower accounted for nearly 55% of additions from 2016 to 2021. However, hydropower still continues to expand, enlarging electricity access cost-effectively in many countries.
We have revised our forecast upwards 25% to take account of new and additional wind and PV auction capacity and additional projects reaching financial closure in some markets. Electricity purchase guarantees from state-owned utilities or international development organisations, and concessional financing by international, regional or country-level development banks, facilitate capacity growth in the region.
South Africa’s renewable energy capacity is forecast to expand more than 13 GW from 2022 to 2027. Government-led auctions enable development of over 7 GW of new utility-scale solar PV and more than 3 GW of onshore wind. Additional drivers outside of auctions for utility-scale uptake include municipalities contracting renewable power from IPPs to reduce the impact of loadshedding. In addition, Eskom is repurposing retiring coal plants as hubs for renewable capacity.
Meanwhile, two policies aid distributed solar PV deployment: the first is the government’s increase to the licensing capacity threshold for small-scale (embedded generation) power stations up to 100 MW, enabling development of larger installations, especially by mining companies. The second is a proposed feed-in tariff for commercial and residential PV systems. While the details of the FIT have yet to be confirmed, heightened loadshedding and a proposed electricity price increase are expected to accelerate distributed PV deployment throughout the forecast period as consumers increasingly view self-consumption as a means to maintain power and avoid high bills. Market challenges include delays in the signing of PPAs for awarded auction projects and low grid availability, as both hinder the timely development of new capacity.
Ethiopia’s renewable capacity will expand more than 125% (+6 GW) from 2022 to 2027. With commissioning of the Grand Ethiopian Renaissance Dam, hydropower provides over 80% of additions. At the same time, the solar PV and wind forecast has been revised downwards 25% due to project cancellations. Government agreements with private firms will lead to utility-scale solar PV additions later in the forecast period, supported by concessional financing, but a lack of additional tenders and ongoing social and political issues are barriers to further development.
Kenya’s renewable capacity expands nearly 90% (+2 GW) from 2022 to 2027. PPAs signed under the country’s previous FIT policy drive over 1 GW of wind and utility-scale solar PV expansion. Meanwhile, growth in the residential PV segment is spurred by a recently announced net-metering programme for up to 100 MW of total capacity, although customer fees may hinder uptake. Additionally, the expansion of existing geothermal resources and new developments provide over 500 MW of new capacity. Nevertheless, land-rights issues, interconnection delays, stop-and-go policy and PPA renegotiations lead to project delays and cancellations, lowering investor confidence.
Nigeria is forecast to add over 1 GW of renewable capacity from 2022 to 2027, half from hydropower. PPAs enable utility-scale solar PV development, and private capital and development bank financing support the country’s prioritisation of solar PV mini-grids for universities, hospitals and rural electrification. Distributed solar PV deployment increases as consumers install solar PV systems to supplement or replace fossil fuel-fired backup generators to offset rising diesel costs. The lack of enabling policy for large-scale renewables, along with power outages caused by ageing infrastructure, hinders more extensive development.
Hydropower will make up 70% of Tanzania’s 3 GW of additions through 2027, while agreements with the national utility (TANESCO) enable nearly 500 MW of new utility-scale solar and wind development. Although low installed capacity and limited transmission and distribution infrastructure challenge additional growth, proposed projects will be built near existing transmission infrastructure, helping ease grid access and increasing utility-scale solar PV capacity during the forecast period. A combination of grants and government programmes drive off-grid solar PV growth, bringing power to homes and critical infrastructure. Nevertheless, a lack of policies supporting the country’s target of 6 GW of renewable energy by 2025 prevents higher growth.
As sub-Saharan Africa has some of the world’s highest renewable resource potential, the accelerated case forecasts nearly 30% greater additions, led by solar PV, onshore wind and hydropower. Achieving higher deployment will require firm auction and tendering schedules with the timely signing of PPAs for awarded projects. Plus, additional partnerships between IPPs and governments or development banks for credit enhancement mechanisms to address project financing and off-taker risk could increase investor confidence. Finally, grid upgrades could help facilitate project interconnection and integration, which can sometimes take as long as one year.
