- More than 600 million people still lack access to electricity in Africa.
- EU strikes multiple energy deals with the Middle East.
The investment director for infrastructure equity at British International Investment, Saad Ul Islam, has disclosed that private equity funds are looking to Africa to provide energy transition investment opportunities, and small-scale projects not connected to national grids are particularly attractive. He made this known to Private Equity International.
More than 600 million people still lack access to electricity in Africa, almost half the population, and those with access do not always receive 24-hour reliability, according to the International Energy Agency (IEA). But there is a growing trend of private equity firms playing a growing role in supporting the provision of energy services and technology, according to Ul Islam.
“Our view is that the energy transition in Africa will be mainly decentralized,” investment director Ben Hughes at Camco says, and these lower-cost projects are “much easier to deploy and finance” as a result. Blackouts and erratic power supply from national grids have led more homes and businesses to turn their backs on more traditional models of energy supply and embrace private-sector energy solutions instead.
The EU, in efforts to pivot its energy reliance away from Russia, is embarking on a campaign to find more secure energy sources. EU strikes multiple energy deals with the Middle East. More than a third of new EU-nation energy deals since the invasion of Ukraine are with Middle Eastern countries, with the UAE leading the way, writes Andrew Hammond, Associate at LSE IDEAS at the London School of Economics for Arab News.
Of the 122 agreements put in place since March 2022, the US and UAE lead with 21, followed by Azerbaijan (10), Norway (nine), Algeria (nine), Qatar (eight), Serbia (five), Egypt (five), Saudi Arabia (four), and Japan, Israel, Namibia, Georgia, Angola, Namibia and Libya (all with two). From the EU side, Germany has the largest number of agreements, at 27, followed by Italy with 18 and Hungary with 14.
But Hammond says the tracker indicates this success will complicate the EU 27’s energy transition, as new gas infrastructure will take years to secure value for money, and so must be part of the bloc’s energy mix for a corresponding amount of time. He stated, “EU nations will need to do much more to invest in clean energy infrastructure if they are to decarbonize their economies, sustainably, in the next decade.”