The north leads in February renewables funding

From the newsletter

North Africa dominated renewable energy investment in February 2025, securing $3.6 billion, roughly 72% of the total funding. This was largely due to an Egyptian 2 GW wind project. East and Southern Africa followed, attracting $561m and $556m, respectively. West Africa received only $40m, while Africa-wide funding got $258m.

• Despite North Africa leading in renewable energy funding, only two countries, Morocco and Egypt, received investments. In contrast, East and Southern Africa's funding was much more spread out, with four countries in each of the regions receiving investments.

• There was an additional $350 billion in commitments from international banks and multilateral institutions targeting the financing of renewable energy projects in Africa.

More details

• North Africa's large share of the funding is attributed to mega-projects being undertaken in the region. These projects are not only targeting local electricity consumption but export markets as well. Egypt's 2 GW wind plant plans to export electricity to Saudi Arabia. This plant alone got $2.3 billion in loans from banks. Plans are underway to construct a transmission line with the capacity to transfer 3,000 MW of power.

• Morocco's $300 million loan from the European Bank for Reconstruction and Development (EBRD) is geared towards upgrading its transmission network and supporting policy changes that allow more private sector investment in the transmission network, similar to the generation sector. It plans to export electricity to the UK via a subsea cable and is planning to build a transmission line to Mauritania as well.

• Southern Africa received seven funding deals: Three in South Africa accounting for half the region's total, two in Namibia, and one each in Zimbabwe and Eswatini. What's more interesting is that Cape Town received a $150 million concessional loan from the German development bank KfW for its electricity infrastructure and renewable energy generation. It became the first municipality in South Africa to secure investments in its energy sector after the unbundling from Eskom, the national power utility company.

• Namibia, Zimbabwe, and Eswatini are all investing in their energy generation capacity, especially after South Africa reduced its electricity exports to meet its local demand. The neighbouring countries reliant on South African supply are now looking inward to develop their own power generation.

• East Africa received four funding deals. Malawi got $521 million for a hydropower project and its energy infrastructure. It plans to build a 360 MW hydro plant, and a loan from the European Union will support the project in which TotalEnergies recently acquired a stake. British International Investment also provided a grant to SunCulture to enable it to scale up the use of solar pumps for irrigation. 

• West Africa saw little activity, with only the Malian government investing $40 million to generate 100 MW. This investment targets generating power from both solar and biomass for a state-owned cotton company.

Our take

• The Southern African region, while ranked second in investments, holds significant potential for further growth. The load shedding challenges faced by South Africa, in particular, open up the market for more independent power producers to contribute to electricity generation. These challenges create opportunities for increased investment in the region's energy sector.

• North Africa's growing demand for electricity exports also presents attractive prospects for investors. Morocco and Egypt, in particular, are strategically located and possess abundant renewable resources. This gives them a competitive advantage to explore export opportunities to Europe and the Middle East.

• While the energy sector has shown maturity and attracted investments, it still needs concessional loans to accelerate the deployment of renewable energy projects. African banks may be asked to provide loans with lower interest rates to energy companies. This would help reduce the financial burden on developers and make more renewable energy projects viable, especially in countries with limited access to affordable financing.