Sub-Saharan Africa: Energy Transition Outlook 2025

 Sub-Saharan Africa: Energy Transition Outlook 2025

• - Fossil fuels account for 43% and biomass (predominantly used in cooking and water heating) accounts for 53% of primary energy supply in 2024. Roughly four out of five households lack access to clean cooking (IEA, 2025).
• - Sub-Saharan Africa holds 85% of the global population without electricity – 588 million people (World Bank, 2025a). One-third live in Nigeria, the Democratic Republic of the Congo, and Ethiopia (IRENA, 2025). Due to unreliable grids, back-up generators are widely used, with high diesel costs (IFC, 2019).
• - Vast solar, wind and hydropower potential offer great opportunities for renewable power. The gap between financing needs and actual flows remains substantial. Over the last 20 years, the region accounted for 2% of global renewable energy investments (UNSDG, 2025). Installed renewables capacity reached 71 GW in 2024.
• - Climate change risks range from erratic precipitation patterns to severe drought. Torrential rains and severe flooding affected nearly seven million people in 2024 (UNOCHA, 2024) and insurance coverage is limited. Nigeria’s 2022 floods caused USD 4.2 billion losses (German Watch, 2025).

Pointers to the future

• - Energy agendas focus on developing oil and gas reserves, transitioning cooking away from conventional biomass, and expanding renewables in the electricity system – driven increasingly by falling solar and battery costs.
• - With limited public funding and financially constrained utilities, liberalized markets will be key to attracting electricity investments. Countries like Kenya, Nigeria, South Africa, Tanzania, and Uganda, are reforming their electricity sectors to enable independent power producers, supported by the African Union’s work on regulatory harmonization and the African Single Electricity Market (AfSEM) framework for regional integration and cross-border electricity trade.
• - Power projects are benefitting from Chinese technologies and investments, particularly through Belt and Road initiatives which surged to USD 30.5 billion in H1 2025 from USD 6.1 billion in H1 2024 (Nedopil, 2025).
• - High financing costs make concessional finance critical for catalyzing private capital, with the Multilateral Investment Guarantee Agency (MIGA) playing a role in risk mitigation (DNV, 2025). However, a 7% drop in international aid (OECD, 2025), the dismantling of USAID’s Power Africa, and the US withdrawal from JETPs with South Africa and Senegal, complicate access to finance.
• - Initiatives like the EU Scaling up Renewables in Africa campaign, in collaboration with Mission 300 of the World Bank and African Development Bank (EC, 2025), aim to support energy access. Distributed solar is also growing organically, especially among commercial users seeking alternatives to unreliable and costly grid power.
• - Hydrogen ambitions are at early stages with governments seeking partnerships. Most plans are export-oriented and driven by global partners given fiscal limitations and lack of national subsidies for capital-intensive projects.

https://www.dnv.com/energy-transition-outlook/2025/sub-saharan-africa/