SA and Egypt beat the solar competition

January 16, 2025

From the newsletter

A report released by the Africa Solar Industry Association (AFSIA) shows that Africa installed 2.5 GW of new solar capacity in 2024. South Africa and Egypt dominated the lead with 1,235 MW and 707 MW, respectively, marking 78% of Africa's total installations and being the only countries with over 100 MW installations.

  • South Africa's growth was mainly driven by the commercial and industrial sectors and the growing power-wheeling market, where energy companies set up the infrastructure and sell the energy to companies. Egypt's growth was mainly from utility-scale projects.

  • Nigeria and Zambia saw the highest growth rates, mainly due to the energy challenges facing their countries. Nigeria's growth was driven by the need for alternatives to an unstable grid, while Zambia's was driven by severe load-shedding and government initiatives to diversify the energy mix..

More details

  • In 2024, utility-scale solar projects led Africa's solar energy expansion, accounting for 72% of new installations. This marked a notable shift from the previous dominance of commercial and industrial (C&I) projects.  This growth in utility-scale projects can be attributed to the numerous challenges governments face in supplying reliable energy. Due to these challenges, many countries have set ambitious renewable energy targets, with solar energy playing a central role. For example, South Africa aims to achieve 19 GW of renewable energy capacity by 2030, with solar energy playing a major role.    

  • Despite the dominance of utility-scale projects, the C&I solar sector also showed strong growth, with a 15% increase in both captive and wheeling projects. Captive C&I projects, where businesses generate solar power for their own use, are predominantly located outside of South Africa. Wheeling projects, which involve transmitting solar power across the grid, are concentrated within South Africa. Notably, the wheeling market in South Africa installed over 256 MW of solar capacity in 2024 alone.   

  • Battery energy storage systems (BESS) experienced a tenfold increase in installations in 2024, driven by the need to mitigate load shedding and grid instability, particularly in South Africa.  Policies like South Africa's Risk Mitigation IPP Procurement Programme (RMIPPPP) and Battery Energy Storage IPP Procurement Programme (BESIPPPP) explicitly encourage the inclusion of BESS in solar projects, further supporting this growth.    

  • Many African countries have significant renewable energy commitments. Algeria aims for 15 GW of renewables by 2035, with solar power playing a major role.  Angola targets 800 MW of renewable energy by 2025, with a goal of 71% renewable generation by 2027.  Egypt plans to achieve 42% renewable energy by 2030, expanding to 58% by 2040.  Ethiopia and Kenya both aim for 100% renewable energy generation by 2030. Mauritania, Morocco, Namibia, Senegal, and South Africa have also set ambitious renewable energy targets.    

  • Government initiatives like the East African Power Pool are opening new market frontiers for energy companies and will likely lead to more utility-scale solar projects. 

  • Looking ahead, the project pipeline for 2025 is robust. Nearly 20,000 solar projects are at various stages of development, with large-scale projects representing over 80% of the planned capacity.  

  • As solar becomes more affordable, it becomes an increasingly attractive option for governments, businesses, and individuals seeking reliable and clean energy solutions. This price decline can help overcome financial barriers, enabling greater energy access and supporting sustainable development across the continent.

Our take

  • African countries offer promising opportunities for solar energy development, with some showing more promise than others. South Africa's growing C&I sector, demand for reliable power, and favourable policies allowing private investors to wheel power to interested customers present a significant opportunity. Kenya and Nigeria similarly show the same trend with increasing demand from C&I customers.

  • Given these trends, investors and solar companies should strongly consider targeting the utility-scale and C&I solar segments in Africa. The market dominance of these two segments presents a significant opportunity. Investors can target government tenders and partnerships with national utility companies, offering potentially stable and long-term returns.

  • However, navigating the African solar market also presents challenges. Regulatory complexities, including diverse and sometimes unclear regulatory frameworks across different countries, can be a hurdle. Weak grid infrastructure in some regions may pose challenges for connecting large-scale projects or distributing generated power. 

  • To mitigate these risks, energy companies should carefully assess the grid's capacity to handle new projects.  They should also structure agreements to ensure compensation for potential delays in power evacuation due to inadequate infrastructure.