This month, BloombergNEF has published the inaugural issue of the NetZero Pathfinders Monthly, a publication presenting best practices to decarbonize major emitting sectors of the global economy.
The Pathfinders framework identifies four pillars of net-zero strategies and the major sectors and stakeholder groups affected by climate change who, alongside policy makers, must lead the way in addressing it. The focus of this month’s edition is the energy sector and Pathfinders Pillar 1: accelerating deployment of mature climate solutions.
In the recently published Pathfinders report Scaling-up Renewable Energy in Africa, we examined barriers that have limited investment flows to the continent. This month, we summarize three major barriers to decarbonization that exist in Africa, then discuss potential solutions that have been tried and have generally succeeded elsewhere in the world.
Read more about how we devised the NetZero Pathfinder Pillars and key topics, and read future issues.
Clean energy investment in Africa reached the lowest level since 2011.
Renewable energy power-generating assets attracted $434 billion worldwide in 2021, but just 0.6% of that ($2.6 billion) went to African nations.
Over half of Sub-Saharan Africa still lacks access to electricity.
In 2020, barely half of the population in Sub-Saharan Africa had reliable electricity service, according to The World Bank.
Fossil fuels meet three quarters of Africa electricity demand.
Gas, coal and oil accounted for 75% of electricity produced in Africa in 2021. Gas was 41% and coal 27%.
Inadequate policies and enforcement are limiting investment opportunities.
The share of African nations with long-term clean power targets in force jumped to 86% in 2022 from 57% in 2019, but the implementation of enforcement mechanisms has been weak.
Consistent clean power procurement processes signal investors and developers to build project pipelines.
Demand for electricity is growing rapidly in Africa. Auctions and tenders have been the most successful procurement mechanism around the world, but contracts signed in Africa only represent 4% of the global total.
Improving on- and off-grid infrastructure is key to delivering reliable, cost-effective, low-carbon electricity.
Thoughtful, clearly communicated grid planning is key but just a third of African nations have transparent grid extension plans in force.
Local capital providers can do more.
Africa-based lenders and investors can play a fundamental role in scaling on-grid and off-grid renewables deployment.
Three barriers that limit clean energy deployment are common to many African nations:
(1) lack of consistent clean power procurement practices, (2) poor planning around electricity access and grid expansion efforts and (3) lack of knowledge of clean energy opportunities from domestic investors. Addressing these could unlock significant renewable energy investment flow.