Africa’s Energy Transition: Experts stress need for inclusive, strategic funding

Africa’s Energy Transition: Experts stress need for inclusive, strategic funding

CHIGOZIE AMADI

As Africa faces the pressing need to transition to cleaner energy sources, some experts have raised concerns about the affordability, accessibility, and inclusivity of the transition.

They stressed the need for strategic funding to ensure that the shift away from fossil fuels does not disproportionately affect the continent’s vulnerable nations.

The experts shared their insights during a webinar on Tuesday, with the theme ‘Interrogating Just & Inclusive Energy Transition for Africa.’

The webinar was organised by OTL Africa Downstream in celebration of the International Day of Clean Energy.

Adedoyin Pearse, an energy expert with Siemens Energy Venture, emphasised the importance of universal energy access and the inclusion of marginalised communities.

“It’s heartbreaking to know that even in countries like Nigeria, there are still communities that are not connected to the grid or have no power at all,” Pearse said.

She underscored the urgency of addressing energy poverty.

Pearse also highlighted the potential risks of transitioning from fossil fuels, especially for workers in industries like coal mining.

“As we move toward cleaner energy sources such as wind, solar, and hydro power, we must ensure that workers displaced by this transition are not left behind,” she added.

A just transition, she argued, must prioritise the livelihoods and well-being of communities that rely on these industries for employment.

The energy transition must be “human-centered,” Pearse continued, with fairness and equity at the forefront.

She stressed that the African context, where energy poverty remains widespread, requires particular attention to avoid exacerbating existing inequalities.

“We need to ensure that no one is left behind as we transition,” she said.

On the subject of financing, Pearse pointed to Africa’s vast untapped renewable resources, such as wind and solar energy.

However, she noted that insufficient and unevenly distributed funding remains a significant barrier to harnessing these resources.

She called for a strategic shift in how financial backing is allocated to the region, urging the support of local investors and entrepreneurs.

“The continent holds 60 percent of the world’s solar energy potential, yet funding for solar and wind energy projects in Africa remains disproportionately low,” Pearse noted.

“We need to raise local investors who have an appetite for risk capital. It’s not just about securing funds, but about ensuring these investors understand the risks involved,” she added.

Mr Chibuzor Ifeanyi, Country Manager of Vitol Nigeria, also provided insights into the current state of energy investments in Africa.

He highlighted the growing demand for energy across the continent and emphasised the need for substantial investments to meet this demand.

According to Ifeanyi, green and brownfield projects together contribute approximately $35 billion annually to the continent’s energy sector, yet the financing gap remains significant.

Ifeanyi pointed out that global energy investments were estimated to reach $200 billion, but Africa’s share remains insufficient.

“Do the sums and you can see for yourself that the shortfall is quite significant,” he said, stressing the critical need for greater investments in energy infrastructure.

He said alternative financing options such as commercial capital, insurance, and guarantees, could help mitigate the risks associated with energy projects.

He highlighted the growing role of natural gas, particularly LNG (Liquefied Natural Gas), in Africa’s energy future.

“Several African countries, including Angola and Mozambique, have massive LNG projects that are attracting significant investments.”

Ifeanyi highlighted Vitol’s transition into the clean energy space, noting the company’s investments in bio-LNG, sustainable aviation fuel, and biodiesel as part of its commitment to sustainability.

Ogutu Okudo, CEO of Guuru Energy in Kenya, echoed the need for regional cooperation in Africa’s energy transition.

She pointed to the success of grid integration in East Africa, where countries like Kenya, Uganda, and Rwanda have successfully interconnected their national grids.

“When Kenya faces power outages, we can rely on neighboring Uganda to supply power,” Okudo said.

She illustrated the benefits of cross-border energy cooperation.

However, Okudo acknowledged that regional cooperation in other parts of Africa faced challenges, particularly in aligning national grids and energy policies.

“The need for interconnectivity is clear. It’s essential not only for providing stable power but also for promoting economic growth and job creation,” she said.

According to her, successful examples like East Africa’s grid integration can inspire other regions to adopt similar approaches.

She also emphasised that global energy demand is expected to rise significantly, particularly in newly industrialised and developing nations.

“By 2035, 95 per cent of the world’s energy demand increase will come from countries like those in Africa, which will play a key role in meeting the growing global energy needs,” Okudo said.

Mr Ian Brown, Managing Director of Afri-Inspect, provided a thought-provoking presentation on Africa’s potential in the global energy transition.

He noted that Africa is home to 30 per cent of the world’s critical minerals, such as cobalt, nickel, and lithium, which are essential for clean energy technologies.

“These minerals are vital for the production of wind turbines, electric vehicles, and other renewable energy technologies, making Africa a key player in reducing global carbon emissions,” he said.

Brown pointed out that Africa, in spite of its vast mineral wealth, had long been a net exporter of these resources without realising the full economic benefit.

“For decades, Africa has exported critical minerals without capturing their value locally.

“It’s time for Africa to take control of its own economic future,” he said.