Sub-Saharan Africa is rich in energy resources.
Making reliable and afordable energy widely available is critcal to the development of a region that accounts for 13% of the world’s populaton, but only 4% of its energy demand. Since 2000, sub-Saharan Africa has seen rapid economic growth and energy use has risen by 45%. Many governments are now intensifying their eforts to tackle the numerous regulatory and politcal barriers that are holding back investment in domestc energy supply, but inadequate energy infrastructure risks putng a brake on urgently needed improvements in living standards. The picture varies widely across the region, but, in sub-Saharan Africa as a whole, only 290 million out of 915 million people have access to electricity and the total number without access is rising. Eforts to promote electrifcaton are gaining momentum, but are outpaced by populaton growth. Although investment in new energy supply is on the rise, two out of every three dollars put into the sub-Saharan energy sector since 2000 have been commited to the development of resources for export.
A severe shortage of essental electricity infrastructure is undermining eforts to achieve more rapid social and economic development. For the minority that has a grid connecton today, supply is ofen unreliable, necessitatng widespread and costly private use of back-up generators running on diesel or gasoline. Electricity tarifs are, in many cases, among the highest in the world and, outside South Africa, losses in poorly maintained transmission and distributon networks are double the world average. Reform programmes are startng to improve efciency and to bring in new capital, including from private investors, and grid-based generaton capacity quadruples in our main scenario to 2040, albeit from a very low base of 90 GW today (half of which is in South Africa). Urban areas experience the largest improvement in the coverage and reliability of centralised electricity supply. Elsewhere, mini-grid and of-grid systems provide electricity to 70% of those gaining access in rural areas. Building on successful examples of electrifcaton programmes, such as those in Ghana and Rwanda, the total number without access starts to decline in the 2020s and 950 million people gain access to electricity by 2040 – a major step forward, but not enough. More than half a billion people, mainly in rural areas, remain without electricity in 2040.
Sub-Saharan Africa starts to unlock its vast renewable energy resources, with almost half of the growth in electricity generaton to 2040 coming from renewables. Hydropower accounts for one-ffh of today’s power supply, but less than 10% of the estmated technical potental has been utlised. The Democratc Republic of Congo, where only 9% of the populaton has access to electricity, is an example of the co-existence of huge hydropower potental with extreme energy poverty. Politcal instability, limited access to fnance, small market size and weak transmission connectons with neighbouring countries have all held back exploitaton of hydro resources. These constraints are gradually being lifed, not least because of greater regional co-operaton and the emergence of China, alongside the traditonal lenders, as a major funder of large infrastructure projects. New hydropower capacity in the Democratc Republic of Congo, Ethiopia, Mozambique and Guinea, among others, plays a major role in bringing down the region’s average costs of power supply, reducing the share of oil-fred power. Other renewables, led by solar technologies, make a growing contributon to supply, with a successful aucton-based procurement programme in South Africa showing how this can be achieved cost efectvely. Geothermal becomes the second-largest source of power supply in East Africa, mainly in Kenya and Ethiopia. Two-thirds of the mini-grid and of-grid systems in rural areas in 2040 are powered by solar photovoltaics, small hydropower or wind. As technology costs come down, the atracton of renewable systems versus diesel generators grows (although they are ofen used in combinaton), especially where fnancing is available to cover the higher upfront expense.
Bioenergy use – mainly fuelwood and charcoal – outweighs demand for all other forms of energy combined, a picture that changes only gradually even as incomes rise. Four out of fve people in sub-Saharan Africa rely on the traditonal use of solid biomass, mainly fuelwood, for cooking. A 40% rise in demand for bioenergy to 2040 exacerbates strains on the forestry stock, with eforts to promote more sustainable wood producton hindered by the operaton of much of the fuelwood and charcoal supply chain outside the formal economy. Scarcity, along with eforts to make alternatve fuels like liquefed petroleum gas available, results in some switching away from wood use, especially in towns. Promoton of more efcient biomass cookstoves reduces the health efects of polluton from indoor smoke. Nonetheless, 650 million people – more than one-third of an expanding populaton – stll cook with biomass in an inefcient and hazardous way in 2040.
The rise of the African energy consumer brings a new balance to oil and gas
Almost 30% of global oil and gas discoveries made over the last fve years have been in sub-Saharan Africa, refectng growing global appette for African resources. Nigeria is the richest resource centre of the oil sector, but regulatory uncertainty, militant actvity and oil thef in the Niger Delta are deterring investment and producton, so much so that Angola is set to overtake Nigeria as the region’s largest producer of crude oil at least untl the early 2020s. The value of the estmated 150 thousand barrels lost to oil thef each day – amountng to more than $5 billion per year – would be sufcient to fund universal access to electricity for all Nigerians by 2030. A host of smaller producers such as South Sudan, Niger, Ghana, Uganda and Kenya see rising output; but, by the late 2020s, producton in most countries – with the excepton of Nigeria – is in decline. Additons and upgrades to refning capacity mean that more of the region’s crude supply is processed locally. With regional producton falling back from above 6 million barrels per day (mb/d) in 2020 to 5.3 mb/d in 2040, but demand for oil products doubling to 4 mb/d – an upward trend amplifed in some countries by subsidised prices – the result is to squeeze the region’s net contributon to the global oil balance.
Natural gas resource-holders can power domestc economic development and boost export revenues, but only if the right regulaton, prices and infrastructure are in place. The incentves to use gas within sub-Saharan Africa are expected to grow as power sector reforms and gas infrastructure projects move ahead but, for the moment, as much gas is fared as is consumed within the region. More than 1 trillion cubic metres of gas has been wasted through faring over the years, a volume that – if used to provide power – would be enough to meet current sub-Saharan electricity needs for more than a decade. In our main scenario, natural gas nearly triples its share in the energy mix to 11% by 2040. Nigeria remains the region’s largest gas consumer and producer, but the focus for new gas projects also shifs to the east coast and to the huge ofshore discoveries in Mozambique and Tanzania. The size of these developments and remoteness of their locaton raises questons about how quickly producton can begin, but they provide a 75 billion cubic metre (bcm) boost to annual regional output (which reaches 230 bcm in total) by 2040, with projects in Mozambique larger in scale and earlier in realisaton. East coast LNG export is helped by relatve proximity to the importng markets of Asia, but – alongside the benefts from an estmated $150 billion in fscal revenue to 2040 – both countries are determined to promote domestc markets for gas, which will need to be built from a very low base.
Coal producton and use gradually spreads beyond South Africa, but coal is overtaken by oil as the second-largest fuel in the sub-Saharan energy mix. Development of new coal resources is hindered in many cases by their remoteness and the lack of suitable railway and port infrastructure, consideratons that also afect the outlook for South Africa as the existng mining areas close to Johannesburg start to deplete. Much of the 50% increase in regional output is used locally, ofen for power generaton, with coking coal from Mozambique the only major new internatonal export fow. Prospects for coal are also limited by policy: South Africa, the dominant player in African coal, is seeking to diversify its power mix with renewables, regional hydropower projects, gas and eventually additonal nuclear capacity all playing a role in bringing the share of coal in power output down from more than 90% today to less than two-thirds by 2040. But coal’s relatvely low cost remains an asset in societes concerned about the afordability of electricity.
The sub-Saharan economy quadruples in size and energy demand grows by 80%, but energy could do much more to act as an engine of inclusive economic and social growth. The internatonal arena brings capital and technology, but mixed blessings in other areas. An oil price above $100 per barrel produces a contnued windfall for resource-rich countries – the cumulatve $3.5 trillion in fscal revenue is higher than the $3 trillion that is invested in all parts of the region’s energy supply to 2040 – but few guarantees that this revenue will be re-invested efciently, while the region’s oil product import bills grow, along with vulnerability to supply interruptons. Sub-Saharan Africa is also in the front line when it comes to the impacts of a changing climate, even though it contnues to make only a small contributon to global energy-related CO2 emissions; its share of global emissions rises to 3% in 2040. But the main challenges arise within the region, including not only the needs of a fast-growing populaton but also the impact of weak insttutons, a difcult climate for investment, and technical and politcal barriers to regional trade. Overall, our main scenario outlines an energy system that expands rapidly, but one that stll struggles to keep pace with the demands placed on it. And, for the poorest, while access to modern energy services grows, hundreds of millions – partcularly in rural communites – are lef without.
Beter management of resources and revenues, adoptng robust and transparent processes that allow for more efectve use of oil and gas revenues.
Broad improvements in governance, both inside and outside the energy sector, underpin the achievements of an African Century Case, involving, among many other things, heavy investment in the capacity to formulate and implement sound energy policies, as well as the consultaton and accountability that is essental to win public consent. Although stll not achieving universal access to electricity for all of the region’s citzens by 2040, the outcome is an energy system in which uninterrupted energy supply becomes the expectaton, rather than the excepton. Unreliable power supply has been identfed by African enterprises as the most pressing obstacle to the growth of their businesses, ahead of access to fnance, red tape or corrupton. Relieving this uncertainty helps every dollar of additonal power sector investment in the African Century Case to boost GDP by an estmated $15.
A modernising and more integrated energy system allows for more efcient use of resources and brings energy to a greater share of the poorest parts of sub-Saharan Africa. A reducton in the risks facing investors, as assumed in the African Century Case, makes oil and gas projects more compettve with producton in other parts of the world, allowing more of them to go ahead; and a higher share of the resultng fscal revenue is used productvely to reverse defciencies in essental infrastructure. Electricity trade more than triples as more regional projects advance: 30% of the extra investment in the power sector goes to Central Africa, helping to unlock more of the huge remaining hydropower capacity and connect it to the rest of the contnent. The additon of relatvely low-cost electricity keeps the average costs of supply down, even as power demand rises by almost one-third. Of the extra 230 million people that gain access to electricity in this Case by 2040, 70% are in rural areas, the supply coming primarily from mini-grid and of-grid systems. This investment is instrumental in helping to close the gap in energy provision and economic opportunity between sub-Saharan Africa’s rural communites and the people in its cites. Concerted acton to improve the functoning of the sub-Saharan energy sector is essental if the 21st is to become an African century.