Africa has the world’s lowest electricity access rate, with only 60% of the population connected to the grid—and just 50% in Sub-Saharan Africa. Yet, the continent holds vast, untapped potential for renewable energy across solar, wind, hydropower, geothermal, and battery storage. 

Despite that situation, investment in Africa’s energy sector has slowed in recent years, as international investors withdraw due to perceived high risks, instability and macroeconomic challenges. OECD-based infrastructure and private equity (PE) funds are re-focusing on OECD countries, while major international energy players (e.g., Engie, Enel, EDF) have shifted the focus to the three more mature African markets: RSA, Egypt, and Morocco. European independent power producers (e.g., Akuo, Neoen, GreenYellow) are now seeking to exit the continent to concentrate on their core markets. Africa primarily relies on a small number of long-term players: Development Finance Institutions (DFIs), select major international players such as TotalEnergies, Lafarge-Holcim, Schneider-Electric, Volkswagen, regional infrastructure and PE funds that have remained committed to the continent, and a handful of regional platforms.

However, that shift introduces a unique market opportunity for long-term investors. With development finance institutions (DFIs) refocusing on renewables, ambitious national energy plans, and the emergence of new technologies, the market is poised for revitalization. Only 67 GW of renewable energy capacity has been installed so far in Africa (1 % of the Continent total capacity), in majority in North Africa and the Republic of South Africa (RSA). 

In that study, E-CUBE Strategy Consultants explores the key challenges and opportunities in Africa’s renewable energy sector, identifying strategic entry points for investors aiming to establish themselves as leading players in the continent’s clean energy transition. 

Key figures 

• In 2022 60% of the population had access to electricity, behind the global average close to 90%.
• Power production capacity is estimated at 0.26 TW in 2023, lower than that of other regions, such as China (2.6 TW), USA (1.2 TW), Europe (1 TW) or India (0.5 TW).
• In 2023, only 26% of Africa’s installed capacity was renewable (67 GW).
• Clean power technical potential is estimated at approximately 9,000 TW, far exceeding the 500 TW required by 2030 to achieved universal access to modern energy.
• Current installed capacity of 67 GW represents only around 1% of this total potential.
• Hydropower is the most developed renewable energy source 40 GW installed in 2024, accounting for approximately 60% of the continent's renewable capacity.
• Exceptional solar PV power production potential of 7,900 GW.
• Wind power production is estimated at 441 GW. 

Renewable power production in Africa presents a vast market opportunity 

Hydropower remains Africa's primary renewable source, with a technical potential of 630 GW, but only 6% has been developed. Large-scale projects like Nigeria’s Mambilla Dam (3 GW) require substantial investment and long lead times, while smaller plants under 50 MW offer more flexible opportunities, especially in Central and Eastern Africa. Solar energy has virtually unlimited potential, as Africa receives some of the highest solar radiation levels globally, but only 15 GW have been installed out of an estimated 7,900 GW capacity. Wind power is also underdeveloped, with only 9 GW installed from a potential of 441 GW. Geothermal energy, mainly in the Great Rift Valley, holds promise, particularly in Ethiopia and Kenya, despite high upfront costs. Biomass is emerging, with 1 GW installed, mainly in Eastern and Southern Africa. 

Grid reliability is a major challenge, making flexibility solutions like gas-fired plants, pumped storage, geothermal, and battery storage crucial. South Africa leads in battery storage deployment, with 500 MWh installed. Investment in Africa’s renewables is focusing on large-scale grid projects, commercial & industrial (C&I) solutions, and mini-grids/solar home systems. C&I solutions are gaining traction, with companies like Starsight Energy and Solarise Africa expanding. Mining and cement industries are also investing in decarbonization projects, showing a growing demand for clean energy solutions. 

As Africa accelerates its energy transition, developers are exploring equity-financed projects to fast-track deployment. With the right investment strategies, Africa offers a long-term opportunity for renewable energy players seeking to establish a presence in one of the world's most promising energy markets.

Africa presents a high-risk and complex investment landscape 

Africa presents significant opportunities for renewable energy investment, but challenges include political instability, macroeconomic volatility, and underdeveloped regulatory frameworks, all of which increase perceived risks. Africa is one of the least politically stable regions globally, with conflicts and recent coups affecting investor confidence. Investors often rely on political risk insurance from institutions like the World Bank Group’s Multilateral Investment Guarantee Agency. The macroeconomic environment has worsened, exacerbated by the COVID-19 pandemic and inflationary pressures, complicating investment with currency volatility and weak local capital markets. 

Regulatory frameworks vary across Africa, with countries like Egypt, Morocco, and South Africa offering structured environments, while much of Sub-Saharan Africa depends on direct government negotiations. Financial instability within utilities and rising debt levels make securing government-backed guarantees more challenging. Grid reliability remains a key issue as well, with frequent blackouts and delays in large-scale projects like Tanzania's Rufiji Hydropower Project (2.1 GW), further raising investment uncertainty. 

Capital costs for renewable energy projects in Africa are nearly double those of developed markets, and long lead times—sometimes over five years—add to the complexity. However, addressing political risk, strengthening regulatory frameworks, and improving grid infrastructure are critical to unlocking investment and advancing Africa’s clean energy transition. 

Investments in Africa’s energy sector have slowed over the past decade as key players have lost enthusiasm 

Investments in Africa’s energy sector have slowed, as major players such as development finance institutions (DFIs), infrastructure/private equity (PE) funds, and international industrial players have lost enthusiasm. DFIs remain crucial in driving clean energy development, providing long-term financing (USD 10-12 billion annually). These institutions are increasingly shifting focus from fossil fuels to clean energy projects. Meanwhile, private equity funds like Actis and Meridiam have diversified their investments into other emerging markets and sectors. Many independent power producers (IPPs) are withdrawing from Africa, with some struggling to sell their portfolios. 

A few regional platforms, including Eranove, Globeleq, and Lekela, have become significant long-term players in Africa’s energy capacity. Middle Eastern companies like Masdar and AMEA Power are investing heavily in solar and wind projects across Sub-Saharan Africa. 

China's role has shifted, with investments decreasing since 2016, although it pledged USD 50 billion in 2024 for clean energy projects in Africa, alongside fossil fuel investments. 

Conclusion: while huge investments are expected on the mid-term in Sub Saharan Africa, there is a window for an early mover with a long-term vision

Africa offers immense potential for clean energy development, with growing investment expected in the next decade. Private sources, alongside DFIs, will play a major role in funding renewable energy projects. The exit of OECD-based players from Sub-Saharan Africa has created opportunities for strategic positioning, especially for acquiring operational assets or advanced pipelines, allowing investors to establish a presence in new markets. Success in early-stage markets could position investors as key energy producers, enabling further long-term growth. 

Closed funds are facing difficulties in exiting their investments due to the current slowdown, making Africa a buyer's market. Local developers, backed by closed funds, are seeking long-term capital to finance growth, presenting opportunities for strategic investors. DFIs’ renewed focus on renewable energy is expected to trigger increased financing, particularly for debt in clean energy projects, and will ripple through private equity and infrastructure funds. 

Sub-Saharan Africa remains dynamic, with countries adopting favorable regulations and planning clean energy initiatives. Strategic positioning in key Sub-Saharan markets now can secure a long-term foothold in Africa’s growing renewable energy sector. 

By E-CUBE Strategy Consultants 

A strategy consulting firm exclusively focused on energy, transportation, and decarbonization challenges.