In the face of climate change challenges, North Africa – encompassing Algeria, Egypt, Libya, Morocco, Tunisia, and Sudan – emerges as a key player in the global energy transition. The region’s economies, heavily reliant on agriculture, fishery, and tourism, are increasingly disrupted by climate-related issues. However, with abundant solar and wind potential, North Africa is well-positioned to lead the way in renewables-based climate resilience.
As the largest energy market in Africa, North Africa, excluding Sudan, stands out with notable socio-economic development, industrialization, and access to modern energy. This unique combination, coupled with the region’s vast renewables potential, positions North Africa as a potential leader in the global energy transition.
The business case for renewables in North Africa is robust, given the significant reduction in the costs of solar and wind technologies. The region leads the African continent in deploying new utility-scale wind and solar projects, boasting almost half of Africa’s total installed wind power generation capacity and a fifth of its grid-based solar power generation capacity.
Moreover, North Africa is poised to become a major producer and exporter of green hydrogen. With low-cost renewables potential and proximity to Europe, where demand for green hydrogen is rising, several North African countries are exploring pilot projects for green hydrogen production and export.
While the region shows promise, there is a need for increased investments. Despite peaking at USD 5.7 billion in 2017, investments in renewables have consistently remained below the USD 3 billion mark, reaching USD 2.4 billion in 2021. Furthermore, there’s a call for more equitable distribution of investments, as currently, most are concentrated in Morocco and Egypt.
In contrast to the global trend where private sector financing dominates renewables development funding, North Africa relies heavily on public finance. Multilateral development banks, development finance institutions, export credit agencies, guarantee funds, and private reinsurance play a crucial role in providing direct funding, risk mitigation support, and technical assistance for future renewable energy projects in the region.
Renewables investment in North Africa also holds significant job creation potential, outperforming fossil fuels in job creation by two to five times per dollar invested. The region, with its sizable and educated workforce, has an opportunity to capitalize on this potential through appropriate labor market and education policies, including technical and vocational training programs.
As competitive auctions emerge as a primary driver for renewables investments, the region’s future may see additional policies such as net metering and feed-in-tariffs, aligning with socio-economic goals, including the Agenda 2030. North Africa stands at the crossroads of a renewables revolution, ready to harness its potential for climate resilience and sustainable development.
Commentaires