Solar dominates Africa’s energy investments, but millions remain in dark

Africa’s renewable energy sector is experiencing unprecedented growth, with solar power attracting more than half of clean energy investments on the continent.

Yet this expansion sits alongside a stark reality: roughly 600 million Africans still lack access to electricity, exposing a fundamental disconnect between where capital flows and where power is needed most.

Between 2020 and 2025, Africa invested $34 billion in clean power technologies, with “52 percent allocated to solar energy and 25 percent to onshore wind,” according to the African Energy Chamber’s 2026 Outlook Report.

Despite this influx, the continent’s share of global renewable investments reached just 1.5 percent in 2025, rising to a projected peak of only 2.7 percent by 2030, figures that underscore Africa’s marginal position in the global energy transition despite hosting nearly one-fifth of the world’s population.

The solar investment boom reflects genuine economic advantages. Utility-scale solar photovoltaic projects across Africa now operate with levelized costs of electricity ranging from $32 to $67 per megawatt-hour, making them increasingly competitive against fossil fuel alternatives.

“Both PV and wind have more affordable LCOE prices compared with gas generation and coal in South Africa, Egypt and Nigeria,” the report notes, though it cautions that “a key challenge remains in the intermittency of these sources and the need for dispatchable power.”

Yet cost competitiveness alone hasn’t translated into universal access. The electrification crisis remains most acute in rural areas, where infrastructure costs are prohibitive and population densities low. Sub-Saharan Africa’s electrification rate stands at approximately 54 percent in East Africa and 59 percent in West Africa, with countries like Burundi, Central African Republic, and South Sudan languishing below 30 percent.

The disparity between urban and rural access is dramatic. “The uneven distribution is largely due to better infrastructure investments in cities, where the concentration of population and economic activities makes it more viable for utility companies to provide services,” the report explains. In contrast, rural regions face “lower population densities, higher cost of extending electricity networks and lower income, which hinder the expansion of electrification efforts.”

This rural-urban divide has created what amounts to two separate energy markets on the continent. Government-led procurement programs have auctioned approximately 25 gigawatts of renewable capacity by July 2024, primarily utility-scale projects connected to national grids that serve cities and industrial centers.

Meanwhile, an additional 11 gigawatts has been secured through private power purchase agreements, again largely benefiting commercial and urban consumers.

The off-grid solar sector, which specifically targets unserved rural populations, operates on an entirely different scale. In 2023, this segment raised around $425 million, less than 2 percent of the capital flowing into grid-connected renewable projects during the same period.

The funding gap is enormous: “Investments of over $30 billion per year would be needed to achieve full access to electricity by 2030, more than eight times the current annual investment of ~$3.7 billion,” according to International Energy Agency estimates cited in the report.

This financing chasm reflects fundamental differences in how investors perceive risk and return. Large-scale solar farms offer predictable revenue streams through power purchase agreements with creditworthy utilities or corporate offtakers. Distributed generation and microgrids serving low-income rural communities present far more complex challenges: higher per-unit costs, currency risks, uncertain payment discipline, and regulatory frameworks that often favor grid extension over decentralized solutions.

“To ensure sustainability of these systems, investments in training programmes for local technicians and engineers are needed,” the report emphasises. “Building local capacity will empower communities to operate and maintain their energy solutions effectively, creating local employment opportunities.” Yet these capacity-building investments, while essential, further increase upfront costs without improving near-term financial returns, precisely the combination that deters conventional investors.

The technology exists to close the access gap. Pay-as-you-go solar systems have proven successful in Kenya, Uganda, and Tanzania, where companies like M-KOPA Solar have provided solar home systems to over one million households through mobile money platforms. In Ghana, Village Power has facilitated community-owned microgrids, while various public-private partnerships have demonstrated viable models across multiple countries.

What’s missing is capital at the required scale. The World Bank Group, in collaboration with the African Development Bank, has launched ‘Mission 300,’ targeting electricity access for 300 million people by 2030. Between July 2023 and February 2025, the initiative connected 21 million people and built a pipeline of projects designed to reach over 100 million more. Yet even these ambitious targets fall short of universal access, and the initiative has faced setbacks, including the United States’ withdrawal from the Just Energy Transition Partnership, “cancelling $56 million in grant funding and $1 billion in potential commercial investment as of February 28, 2025.”

The concentration of solar investments in grid-connected projects isn’t merely about investor preferences—it also reflects the priorities of African governments facing severe power shortages. South Africa, Egypt, and Morocco lead the continent in renewable procurement, but their focus remains squarely on grid-scale generation to address industrial demand and urban supply deficits.

South Africa, for instance, has implemented both the Renewable Energy Independent Power Producer Procurement Programme and the Battery Energy Storage Independent Power Producers Procurement Programme, procuring gigawatts of capacity. Yet these initiatives primarily address Eskom’s generation crisis and industrial power needs rather than rural electrification.

The country’s average power consumption per capita was 500 kilowatt-hours per year in 2024, compared to a global average of 3,700 kWh, and “is projected to increase to 793 kWh/year” by 2050, still dramatically below global norms.

Nigeria presents perhaps the starkest paradox. As Africa’s largest economy and most populous nation, it has attracted significant renewable investment while maintaining one of the continent’s lowest electrification rates relative to its population. The country’s power sector reforms have encouraged private participation, but infrastructure deficits, regulatory uncertainty, and payment discipline issues continue to constrain progress.

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The report identifies several structural barriers preventing solar capital from reaching underserved populations. Financial constraints top the list: “Many governments face budgetary constraints, making it difficult to allocate funds for expanding electrification efforts. Additionally, private sector investments are often deterred by perceived risks and regulatory uncertainties.”

Policy frameworks compound these challenges. “Weak governance and regulatory frameworks can impede progress towards universal access,” the report states. “Inconsistent policies, lack of transparency and bureaucratic hurdles create an unfavourable environment for investment and development in the energy sector.” Zimbabwe exemplifies these problems, where “economic instability and concerns around governance” have deterred investment despite clear need.

The emerging data center sector adds a new dimension to Africa’s power equation. Data center electricity demand, while currently small, is “projected to account for over 5 TWh of electricity demand by 2030” in South Africa alone. In Kenya, data centers are “expected to be ~0.7 TWh of projected demand of 19.2 TWh” by 2030. These facilities offer utilities and developers “a stable demand anchor for power markets” and “consistent and bankable demand” that can “justify large-scale power projects.”

The irony is palpable: solar investments are increasingly driven by data centers, mining operations, and industrial users who can offer creditworthy offtake agreements, while hundreds of millions of Africans who need electricity for basic lighting, refrigeration, and communication remain unconnected because they cannot provide comparable guarantees.

Regional power pools offer potential solutions through scale and integration, but progress has been uneven. The Southern African Power Pool stands as the most successful, yet “around 80%” of its traded power comes from bilateral contracts, with day-ahead market trades representing less than 1% of total demand—far below the 24%+ typical of mature European markets. West and East African power pools lag even further behind.

Looking forward, Africa’s power demand is “projected to increase from an estimated 1,028 TWh in 2025 to 2,291 TWh by 2050”, more than doubling. Meeting this demand while simultaneously addressing the access deficit will require fundamentally different approaches to energy investment and development.

The report calls for “coordinated action across policy, infrastructure and capability development” including “strengthening political and regulatory stability,” “leveraging blended finance models” where “public funds are used strategically to de-risk projects and crowd in private investment,” and utilizing “innovative financial instruments, such as green bonds and aggregation platforms for small-scale projects.”

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Morocco’s success in rural electrification offers instructive lessons. The General Rural Electrification Programme, launched in 1995 when rural electrification stood at just 18%, combined grid extension with off-grid solar solutions to achieve near-universal access. The program’s success demonstrates what’s possible with sustained policy commitment and appropriate financing mechanisms.

As solar continues to dominate Africa’s energy investments, the challenge isn’t generating enough capital for renewable projects—it’s directing that capital toward inclusive energy access rather than merely profitable power generation. Until financing mechanisms align profitability with access, solar’s dominance may illuminate Africa’s cities and industries while leaving its most vulnerable populations quite literally in the dark.

The question facing policymakers, investors, and development institutions isn’t whether Africa can attract renewable energy investment—the $34 billion already committed answers that. The real question is whether the continent can restructure incentives, de-risk distribution, and build institutional capacity quickly enough to ensure those solar investments actually reach the 600 million people still waiting for their first light switch to work.

Dipo Oladehinde is a skilled energy analyst with experience across Nigeria's energy sector alongside relevant know-how about Nigeria’s macro economy.

He provides a blend of market intelligence, financial analysis, industry insight, micro and macro-level analysis of a wide range of local and international issues as well as informed technical rudiments for policy-making and private directions.

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