African renewables attracted $5 billion in February

From the newsletter

The month of February saw renewables in Africa receive over $5 billion in funding as the sector kicked off to a strong start in 2025. This is exclusive of commitments from the World Bank and other multilateral institutions. Wind power received the most funding ($2.3bn), followed by hydropower ($654m) and solar  ($434m). 

• Despite having only two wind power projects (Namibia and Egypt), wind power accounted for the bigger share of the funding. Egypt, in particular, because of its 2 GW wind farm project.

• Solar accounted for the majority of the projects and companies being funded but still came second. It featured both large-scale and small-scale utility projects.

More details

• The month of February saw a lot of developments in funding deals and commitments after the Africa Energy Summit that took place in Tanzania at the end of January. The goal of the summit was to strategise on how to electrify 300 million Africans by 2030. This led to significant deals and commitments. The World Bank and AfDB committed to providing $40 billion for the mission, and Standard Chartered Bank committed to providing $300 billion for climate finance projects.

• Governments, as well as the private sector, committed to financing energy projects, with 12 countries selected for acceleration efforts, including Nigeria, DRC, Tanzania, and Malawi. These countries developed energy compacts that clearly pointed out the investment opportunities, strategies, and targets to achieve their electrification goals.

• In our analysis, the data provided does not capture the above commitments but only captures the funding that has been disbursed. The City of Cape Town municipality in South Africa received $150.2 million from the German development bank KfW. It is the first municipality in South Africa to pursue generating its own electricity and upgrading its network infrastructure, following the unbundling from Eskom, the national power utility company.

• Also in South Africa, SolarAfrica Energy secured $97 million in funding for its 114 MW SunCentral 1 solar project. This is the first phase of a larger project aiming for a total capacity of 1 GW, making it one of the largest solar projects in South Africa.

• Big deals were mostly struck at the country level, like Malawi getting $521 million for hydropower and energy infrastructure upgrades, Morocco getting $314 million for energy infrastructure, and the City of Cape Town getting $150.2 million for energy infrastructure.

• Emerging technologies like solar irrigation and solar fuels received good funding as well. The solar fuels project in Morocco secured $1 billion in funding from Synhelion to manufacture synthetic fuels from solar energy. SunCulture in Kenya received $4 million to support solar irrigation projects.

• The project by Synhelion will be their second plant globally and their first in Africa. The solar fuel plant will have an annual production capacity of 100,000 tonnes, which is 100 times more than their plant in Germany. The company aims to support the decarbonisation of transport, particularly in sectors like aviation and shipping, which are difficult to electrify.

Our take

• Renewable energy in Africa is no longer solely driven by governments. The private sector is taking significant strides, investing in large-scale projects like those seen in Egypt. The market, once considered risky, has matured, enabling faster project development and funding. This increased confidence in the sector's stability allows investors to feel more secure in their returns.

• The World Bank and AfDB funding commitments are expected to catalyse private sector investments. With the closure of the Power Africa project by the US, this funding could play a similar role and mobilise more private capital for renewable energy in Africa. 

• But what is needed most is for African countries to formulate policies that are attractive for the private sector to invest in. These policies hold the key to unlocking Africa's potential for private sector investment. The Mission 300 selected countries, which include the populous DRC and Nigeria, will surely allow bigger private capital flows if they succeed in creating the best private sector policies.