Africa’s electricity demand to grow by 5% in 2025

From the newsletter

A new report released by the IEA projects that African electricity demand will grow by an average of 5% in 2025. This growth more than doubles the rate seen in 2023 and exceeds the 4% global average. Renewables, which accounted for 5.5% of total electricity consumed, are expected to meet a larger share of this new demand.

• This week, both Kenya and Nigeria announced new peak electricity demand records, signalling anticipated growth.

• Africa's major economies, including South Africa, Morocco, Egypt, and Nigeria, have opened their electricity markets, attracting billions of dollars in renewable energy projects. Yesterday, Egypt announced plans to build a 2 GW wind farm–the largest in Africa.

More details

• Electricity consumption demand is mainly driven by the electrification of various sectors, including buildings, transportation, and industry, coupled with a growing demand for energy-intensive applications like air conditioners and data centres. The demand grew 3.4% in 2024, up from just under 2% in 2023 and now projected to reach 5% in 2025.

• Despite the increasing demand, Africa's per capita electricity consumption remains low, about 200 kWh per person. It is roughly 65 times lower than in the US, and about 32.5 times lower than in Europe.

• In 2024, South Africa faced load shedding, but despite this, electricity demand rebounded with a 4.1% growth. The country is investing in new capacity and diversifying its energy mix to meet this growing demand. It has eased licensing requirements and liberalised the electricity market, facilitating private sector investment, which now totals over 11 GW of capacity. In 2024, approximately 4.4 GW of new capacity was installed, primarily from solar (2.8 GW) and wind (1.3 GW). 

• South Africa has also revised its 2019 Integrated Resource Plan, increasing total planned capacity by about 11% to 84 GW. However, challenges remain in evacuating this power due to grid constraints. To facilitate infrastructure development, the government is considering private sector investment in grids, particularly in regions with significant constraints such as the Northern, Eastern, and Western Cape.

• Algeria's electricity demand is estimated to have grown by 5.4% in 2024 and is projected to grow by 5.2% annually until 2027. In July 2024, the country reached a new peak demand record of over 19 GW. Algeria aims to install 15 GW of renewable capacity by 2035, although its current capacity remains below 600 MW. Last year, the country awarded a 3 GW project to Sonelgaz. Solar capacity increased by 13% in 2024 and is projected to grow by an average of around 22% annually until 2027.     

• Egypt's electricity consumption rose by 1.6% in 2024, driven by population growth, economic expansion, and increasing cooling needs. While demand for fossil fuels remained stable, renewable power production expanded by almost 5%. For the 2025-2027 outlook period, total electricity consumption is expected to grow by just under 3% per year, supported by the continued expansion of renewable sources at an average annual rate of 7.1%. The country is rolling out mega-energy projects in solar and wind, including a 1.1 GW wind farm in the Gulf of Suez and a planned 5 GW floating solar project on Lake Nasser.

• Kenya's electricity demand is projected to increase by 6.5% annually between 2025 and 2027. The country is on track to achieve universal access to electricity by 2030 and is focusing on renewable energy sources such as wind, solar, and geothermal. It is working on multiple projects, including the Last Mile Programme, which aims to connect millions in rural areas to achieve universal electrification by 2030.

• All these countries, including Nigeria, Morocco, and Senegal, have ambitious plans to increase their renewable energy share. Kenya, Nigeria, South Africa, and Senegal, which have not yet achieved 100% electrification rates like Algeria and Morocco, have the opportunity to ensure that all new connections are powered by renewables.

• However, challenges remain, especially regarding transmission capacity, with countries like Kenya and Nigeria losing more than 23% of their electricity through system losses. Significant capital is needed to upgrade infrastructure. Innovative financing mechanisms and risk mitigation strategies are required to attract investment. Above all, clear and supportive policies are needed to attract investment and accelerate the energy transition. This need not be limited to national borders. Policy coordination and regulatory challenges related to cross-border energy trade and the integration of renewable energies also need to be addressed.

Our take

• Electricity demand in Africa is expected to grow mainly because the majority of the population is currently not connected to the electricity grid. High urbanisation rates in countries like Kenya and Nigeria will also be significant contributors to new demand.

• If this demand is not met with increased supply, it is likely to lead to load shedding. Kenya experienced several blackouts in 2024 due to excess demand. In Nigeria, this is a regular occurrence, happening at least once a month. With these countries reaching new peak demands this month, there is a risk of potential load shedding if supply is not urgently increased.

• At the same time, a balanced approach is needed when installing renewables. Grid stability is crucial. Variable energy sources like wind and solar require battery storage systems to balance the grid when one source is unavailable. Too many variable renewables on the grid without such backup systems expose the grid to shutdowns.