Sub-Saharan African (SSA) region is undergoing processes of structural transformation necessary for socio-economic development. However, lack of sufficient and reliable electricity supply is known to be one of the biggest constraints. It is estimated that over 600 million people in SSA had no access to electricity in 2018, making it the region with the lowest electricity access rate in the world. Research suggests that this shortage and lack of access to reliable electricity negatively affects GDP growth by 1–2% annually, eventually increasing the cost of doing business and exacerbating poverty and inequality. Meanwhile, the number of people without access is likely to increase by 2040, when the population is estimated to be 2 billion.
New or alternative energy resources must be developed to keep pace with the demand and
transformation trajectories of the region. SSA has the potential to address this challenge by
tapping into non-hydro renewable energy sources, in particular wind and solar energy, especially considering the resource endowment factor, fast dropping costs of these generation technologies and the growing management expertise of deploying such technologies in different contexts.
Development and deployment of wind and solar energy holds prospects for achieving universal energy access as envisaged in Sustainable Development Goal 7. Previous research already indicates that off-grid, mini-grid and on-grid renewable energy systems have tremendous
potential to provide clean and affordable electricity in both rural and urban areas in SSA. Yet, of the USD100 billion invested in the energy sector in Africa between 2010 and 2018, USD70 billion was committed to fossil fuels and only USD13 billion to renewables, plus USD13 billion to grid networks. Such levels of investment in renewables are far from sufficient, as reaching full access by 2030 would require multiplying current investment levels by five, or more than USD2 trillion, between 2019 and 2040.
In addition to the notable financial gap, there are also significant technology and expertise gaps. As with mostfossil fuel equipment which is imported, many SSA countries have limited experience of manufacturing and supplying essential renewable energy equipment. Technology transfer and capacity building are hence as much needed as finance and investment.
The question is, how can these challenges be addressed? China has faced similar challenges to those of SSA and over the past few decades, due to massive investment in the sector, it has nearuniversal electricity access. Furthermore, China is now one of the leading nations in renewable
energy technology manufacturing, financing and supplying, particularly in the areas of on-shore wind energy and solar PV.
Since the early 2000s, China has emerged as a leading partner for Africa’s economic growth and development trajectory. China became Africa’s largest trading partner in 2009, and the Asian country is also emerging as one of the leading investors and providers of development finance for infrastructure projects, resulting in some African countries achieving remarkable economic growth and development. With the launch of the Belt and Road Initiative (BRI) in 2013, infrastructure, including various power sector projects, is at the centre of China–Africa economic cooperation.
The question was how will the political economy from both supply and demand will play the significant role in shaping institutions and ideologies governing the sector?
The African governments should first exhibit strong ambition and determination for a clean
energy transition. This would provide a signal for Chinese companies and financial institutions to consider alternative energy development pathways. The planning needs to take SSA countries’ special technical and financial constraints into consideration and energy regulators should also provide more stable expectations and policy support to both the wind and solar-energy generation and manufacturing capacity. In the context of the COVID-19 pandemic, the disruption of the supply chain for key equipment and components from China has urged many African governments to consider localising at least some production of crucial parts.
From the Chinese side, in responding to these challenges, two overall strategies should be considered.
• One is to instigate changes based on the existing regulatory, financial and business model and framework. This includes urging current regulators to make more specific policy goals, pushing policy banks and export credit agencies to revise their project screening processes, working more closely with renewable energy companies and encouraging private and state companies
to work jointly in exploring SSA markets.
• The other is to promote innovative solutions outside the current model that predominantly
favour large-scale and conventional projects. This could be done by integrating other marketbased financial instruments or multilateral funding streams rather than relying solely on traditional state-backed development finance mechanisms such as green bonds, climate and carbon finance, which have all grown fast in the past few years.
