Africa Looks to China for Investments in Renewable Energy

China may have missed the turn-of-the-century European scramble for Africa, yet it has been making up for it since the 1950s. In recent decades, the rate of investment has accelerated. Chinese FDI (foreign direct investment) to Africa expanded at an average compound rate of 18 percent per year from 2004 to 2016, according to China’s Ministry of Commerce. FDI relates to business investments made in another country by companies from one country (in this case, China). China’s lending activities in Africa much outnumber its FDI investment. Chinese contract financing in Africa has also been rising, reaching a high of $55 billion in 2015, about 20 times the level of FDI.

Africa is seeking to enhance its installed capacity, but it requires finance, including Chinese capital, to achieve its sustainable development goals. The African Development Bank (AfDB) Director of the Renewable Energy and Energy Efficiency Department, Daniel Schroth, told the Chinese state news agency Xinhua this week that the regional bank wants to enhance its relationship with China in the renewable energy industry.

“It’s important to note that China’s renewable energy-producing capacity has grown significantly in recent years. It is a great accomplishment from which Africa may learn,” Schroth remarked. The AfDB has been investing in renewable energy in recent years, with renewable energy projects accounting for more than 86 percent of the AfDB’s total investments in power generation, according to Schroth. “We see that as a huge potential for Africa to develop faster by leapfrogging some of the current technologies.”

The self-described pan-African bank aims to bring electricity access to 250 million Africans by 2030 through its flagship desert-to-power electrification program in the Sahel region. Such regional projects, according to the African Development Bank, pave the way for an African integrated system of “strong infrastructure” that would enable the sharing of green energy for inexpensive and accessible electricity as well as low-carbon solutions.

“The sun may not be shining in one section but not in others,” Schroth argued. The wind may be blowing in certain areas but not in others. You can regulate the power use by integrating them into one system.”

An integrated African energy grid appears to be the best solution for the continent’s energy dilemma and shortage of electricity in some areas. Political instability and a lack of domestic and international investments in the African energy industry, on the other hand, are projected to stymie the continent’s progress toward a green future or the 2050 net-zero objective.

However, it is only fair to point out that certain African countries have been pioneering green energy alternatives such as onshore and offshore wind, solar, and green hydrogen. Morocco, for example, is predicted to produce the world’s third-cheapest green hydrogen in 2050, trailing only Chile and China, the global leader in green energy. Kenya, Egypt, and South Africa have also sought to enhance their renewable energy assets, establishing themselves as Africa’s green hydrogen pioneers.

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