Kenya, Morocco, and South Africa are ranked among select African economies with the most conducive markets for power investment in 2021, Fitch Solutions estimates.
With a score above 25%, Kenya comes top as the most conducive market for sustainable power investments in Africa. Morocco follows with a score of about 11% and South Africa with a score of close to 10%.
Meanwhile, among the ten select economies, Ghana and Nigeria rank lowest, with scores below 7%. That notwithstanding, Nigeria trails below Ghana as the last among the ten select economies for the purposes of analysis.
The other outperformers include Namibia coming, Egypt, Ethiopia, Uganda and Tunisia, respectively.
According to Fitch Solutions, these scores associate with power market characteristics including renewable electricity dependence, overall non-hydropower renewables growth and net electricity exports.
Particularly, Kenya will remain a net exporter of electricity throughout a 10-year forecast period, 2021-2030, Fitch Solutions indicates. Accordingly, Kenyan investors will have significantly greater power security than those in many other markets on the continent.
More so, with a growing renewables capacity, Fitch Solutions indicates that Kenya also ranks among the most renewables–reliant market.
“The composition of its renewable electricity supply, with a strong geothermal component, makes it one of the few markets globally to generate baseload renewable electricity on a large scale. [Thus,] making it attractive to sustainable investors dependent on reliable power supply.”
Fitch Solutions expects that Morocco will be one of the most rapidly growing markets for overall renewables generation. The research firm notes that Morocco is gradually becoming a net exporter of electricity.
Concurrently, the increase in renewables component in its electricity mix will make the country a hub for investors seeking reliable renewable electricity supply, Fitch Solutions suggests.
The renewable capacities of the three top outperformers
Fitch Solutions expects that the Kenya’s growth in electricity will become stronger over the ten-year forecast period. Accordingly, renewables generation will grow by 14.5 TWh and its reliance on renewable electricity will increase from 21.9% to 38.3%. Furthermore, Morocco’s overall electricity exports will also rise to a peak of 2.6TWh in the medium term.
While South Africa ranks among the top three markets in 2021, it will lose its position over the period. South Africa’s electricity exports is declining over the forecast period and relatively more subdued renewables generation growth.
According to Fitch Solutions, the declining exports will see Egypt overtake it to rank third by the end of the ten-year forecast period by 2030.
Specifically, Egypt’s renewable generation growth will increase by a net total of 15.5TWh between 2021 and 2030. Fitch Solutions estimates that there are challenges that are likely to surface in terms of funding and policy formation, thus, slowing renewable generation growth across most markets on the continent.
That said, the research firm does not expect these challenges to feature markedly in Egypt and Morocco. Therefore, expansion in renewable sectors are expected.
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