Africa requires up to $277 billion in annual finance between 2020 and 2030 to meet its Nationally Determined Contributions under the Paris Agreement, with untapped solar, wind and green hydrogen presenting attractive avenues for foreign capital.
According to ‘Climate Investing: The Africa Opportunity’ – a report released by multinational professional services network KPMG -, the need to ramp up climate finance across the continent has highlighted lucrative investment opportunities in renewable energy, particularly for European investors with high levels of capital and expertise.
With access to finance representing a major constraint in Africa’s renewable energy industry, the report underscores the growing opportunities for climate financiers. Specifically, Africa’s solar technical potential is measured at 7,900 GW – more than 1,000 times the current solar generation capacity – while wind potential is measured at 461 GW, which equates to 100 times the current wind generation capacity. Regarding green hydrogen, Africa’s optimal conditions position it to drive industrialization and contribute to global emission reduction efforts. By 2050, Africa stands to produce a surplus of between 20 million and 40 million tons of green hydrogen per annum.
In line with global efforts to address climate change, KPMG’s findings align with the urgent need for increased climate finance in Africa. The continent presently receives only $29.5 billion in climate finance annually, significantly falling short of the $277 billion required to meet Paris Agreement commitments. For European investors, the transformative impact of unlocking Africa’s green potential will not only illuminate homes but also foster economic growth and combat climate change.
Presently, several factors continue to impact energy-related investment in Africa. Africa’s diverse economic landscape – with 54 countries – presents challenges, including political uncertainties and currency instability. Infrastructure issues – like unreliable electricity access and power shortages – hinder business operations and increase costs, while sub-Saharan Africa’s low per capita energy consumption restricts growth. Addressing these challenges is crucial for unlocking Africa’s green potential, and investors engaging in this opportunity can yield profitable returns.
As such, the report encourages early movers, showcasing the potential for high returns in Africa’s evolving green market. This perspective becomes especially pertinent with the forthcoming Invest in African Energy forum, scheduled for May 14-15, 2024 in Paris. The second edition of the event will spotlight investment prospects in Africa’s green sector, emphasizing the imperative of closing the considerable funding gap to unlock the continent’s renewable energy potential.
The Invest in African Energy event in Paris represents strategic platform for stakeholders to delve into these challenges and opportunities, offering a venue for discussions and collaborations on KPMG’s findings that can drive Africa’s sustainable and prosperous future.
Register for IAE 2024 at https://invest-africa-energy.com/. Don’t miss this opportunity to connect with industry leaders, policymakers, and investors. Taking place in Paris, the event will be held from May 14-15.