Energising Africa: Enabling Private Sector Development in Renewable Energy

This policy brief by the Africa Policy Research Institute examines the role of private sector investment in unlocking Africa's renewable energy (RE) potential. Using Nigeria as a case study, it identifies financial, regulatory, and infrastructural barriers that hinder the scaling of clean energy and provides strategic recommendations to create a more predictable and attractive investment environment.

• Africa possesses immense renewable energy potential, including the capacity to generate 10 terawatts (TW) of solar energy, 350 gigawatts (GW) of wind energy, 15 GW of geothermal energy, and 1,750 terawatt-hours (TWh) of hydropower annually. However, over 600 million Africans still lack electricity, and only 2% of global RE investments from the last two decades have been directed toward the continent.
• Private sector participation is critical, accounting for approximately 70% of all RE investments in Africa. Key players include solar developers like M-KOPA and BBOXX, large-scale investors such as InfraCredit—which has mobilised over ₦ 264 billion—and international technology providers like Siemens and General Electric.
• Private investment is constrained by significant financial barriers, most notably currency mismatch—where funding is secured in foreign currency but revenue is collected in local currency—and a lack of affordable local financing. Other hurdles include high perceived risk, weak sector creditworthiness, and high upfront capital costs, which can range from USD 1 million to USD 2 million per megawatt for solar farms.
• Regulatory uncertainty and bureaucratic inefficiency hinder growth. Licensing processes can take a minimum of six months to secure, and many countries lack harmonised RE targets or enforceable purchase obligations. In Nigeria, while the 2023 Electricity Act and Mini-Grid Regulations are positive steps, gaps remain in stable implementation and the accessibility of fiscal incentives like the Pioneer Status Incentive (PSI).
• Infrastructural deficits, particularly outdated and unstable grids, prevent the integration of utility-scale RE. In Nigeria, the national grid collapsed 10 times in 2024, and as of 2025, no utility-scale RE projects have been integrated into the national grid. Additionally, poor road networks in rural areas can delay the delivery of materials by 4-6 weeks.
• Case studies demonstrate the success of public-private partnerships (PPPs). Examples include Kenya's Lake Turkana Wind Power Project (310 MW), Morocco's Noor Ouarzazate Solar Complex (580 MW), and Egypt's Benban Solar Park. In Nigeria, the Toto Interconnected Mini-Grid in Nasarawa State provides 24/7 electricity to approximately 14,000 people by combining solar generation with national grid supply.

APA

Ifeanyi-Nwaoha, N. (2025). Energising Africa: Enabling Private Sector Development in Renewable Energy. Africa Policy Research Institute. https://afripoli.org/energising-africa-enabling-private-sector-development-in-renewable-energy

Chicago

Ifeanyi-Nwaoha, Nnadozie. Energising Africa: Enabling Private Sector Development in Renewable Energy. Africa Policy Research Institute, 2025. https://afripoli.org/energising-africa-enabling-private-sector-development-in-renewable-energy.

Wikipedia

{{cite report |last1=Ifeanyi-Nwaoha |first1=Nnadozie |title=Energising Africa: Enabling Private Sector Development in Renewable Energy |publisher=Africa Policy Research Institute |date=30 June 2025 |url=https://afripoli.org/energising-africa-enabling-private-sector-development-in-renewable-energy |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ifeanyinwaoha2025energising, author = {Ifeanyi-Nwaoha, Nnadozie}, title = {{Energising Africa: Enabling Private Sector Development in Renewable Energy}}, institution = {Africa Policy Research Institute}, year = {2025}, month = jun, url = {https://afripoli.org/energising-africa-enabling-private-sector-development-in-renewable-energy}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }