Nigeria, others encouraging more investment in new oil  —  Report

A report by the Africa Energy Futures: Horizon 2030 released by DLA Piper Africa indicated that Nigeria and few other countries are encouraging more investment in new oil and gas development, contradicting the continent’s commitment to energy transition.

Using 21 countries as templates, the report foresaw challenges and opportunities that would arise in the next five to ten years.

Each country was analysed based on the same set of questions and themes, allowing for comparative analysis.

While major steps are being made in the decarbonisation of African countries, with 12 out of the 21 countries in this report already rely on clean energy as an important part of their power mix, many jurisdictions are still very much fossil fuel reliant.

Significant differences also exist between countries in energy supply diversity and power systems which is resulting in inconsistent development across the continent.

Despite these differences, the report identifies a clear theme of governments across Africa increasing renewable energy capacity, both as part of a pro-energy transition agenda and as the most effective way to meet rising energy demand, which is expected to double by 2040.

In some jurisdictions (Angola, Burundi and Ethiopia), this will take the form of expanded hydroelectric capacity and in others, the focus is on developing solar and wind infrastructure (Botswana, Kenya and South Africa) in each case aimed at reducing dependence on fossil fuels and biomass sources.

The analysis show that almost all of the 21 countries surveyed have legislative and/or investment programs in place for renewables, presenting both the chance for African nations to lead the energy transition and a large-scale cross-continental investment opportunity.

It is anticipated that use of fossil fuels and biomass will continue to play a large part of the energy mix for almost all of the jurisdictions in the next five to ten years. However, outliers, Nigeria, Algeria and Angola have continued to encourage and secure investment in new oil and gas developments.

The incentives for transitioning to renewable energy are recognised and acknowledged in Africa’s markets. In particular, it is perceived as a solution to overcome generation deficits as well as a way of achieving middle-income country status by 2030.

The key to achieving the energy transition will be implementation. Countries will need to ensure that they have in place not only attractive legislative frameworks, but also real drive from governments to incentivise clean energy investment and “bankable” projects.

DLA Piper’s Head of the UK Energy and Natural Resources practice and Partner, James Carter: “Given the post-COP26 backdrop and findings, there is a heavy focus on how energy transition will help arrest climate change.

“Africa, because of its size and predicted future growth and development, will play a key role in decarbonising the global economy through its adoption of renewables and other technological breakthroughs. Our report highlights how far African countries have come and what can actually be achieved in a 2030 horizon.”