Chinese companies are becoming increasingly important in the sub-Saharan Africa power sector, according to a new report from the International Energy Agency.
Access to electricity is still lagging behind the rest of the world in sub-Saharan Africa, with over 635 million people living without electricity. The power sector in the region needs greater access to capital funds, technologies, and capacity building, and significant investment is needed to support the development of the sector.
According to the new IEA report, power projects built by Chinese companies across the sub-Saharan Africa region are contributing significantly to the region’s power sector expansion, with China setting itself up as a major source of financing in Africa. So far, Chinese companies have invested in power sources in all flavors, except nuclear, and all sizes of projects. In contrast, OECD countries avoid financing large hydropower dams or coal-fired power plants.
“African countries have relied heavily on China to support the expansion of their electricity systems, to enable growth and improve living standards,” said Paul Simons, the IEA’s Deputy Executive Director.
Specifically, Chinese companies have invested around $13 billion between 2010 and 2015 into sub-Saharan Africa, financed largely through public lending from China. Chinese companies operating as the main contractor in the region were responsible for 30% of new capacity additions in 2010 to 2015, with more than 200 greenfield power projects contracted to Chinese companies over the period. Chinese contractors have currently built or are currently contracted to build 17 GW of generation capacity between 2010 to 2020, equivalent to around 10% of existing installed capacity in the region.
Though China is not avoiding coal-fired capacity, Chinese contractors have focused on hydropower. In fact, renewable sources account for 56% of the total capacity added by Chinese projects between 2010 and 2020, including 49% from hydropower. There are biomass and waste-to-energy projects in Ethiopia, and hydropower dams in Gabon and Zambia, and other renewable energy projects in Senegal and South Africa.
The main focus for Chinese power projects, however, seems to be aimed at increasing access to electricity in a region where it is famously short on such access. Over 2010 to 2020, a total of 120 million people will gain access to electricity from the power grid for the first time, thanks to grid development and increasing power generation capacity.
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