As the continent seeks to fulfil its commitments under the Paris Agreement, Africa is looking at a staggering annual financial need of up to $277 billion between 2020 and 2030. A new report by KPMG, titled ‘Climate Investing: The Africa Opportunity,’ has identified lucrative investment opportunities in renewable energy, particularly for European investors.
The report underlines the untapped potential in solar, wind, and green hydrogen as key areas for foreign capital. Africa’s solar technical potential alone is measured at a colossal 7,900 GW, vastly exceeding the current capacity. Wind energy also shows immense promise, with a potential of 461 GW. The continent’s optimal conditions for green hydrogen production position it as a future powerhouse in global emission reduction efforts.
Despite its enormous potential, the continent currently receives only a fraction of the required climate finance. At present, Africa secures just $29.5 billion annually, far below the necessary amount to meet the Paris Agreement targets. This funding gap presents a significant opportunity for European investors, who can leverage their capital and expertise to unlock Africa’s renewable energy potential.
Investment in Africa’s green energy sector is not without its challenges. Political uncertainties, currency instability, and infrastructure deficits, including unreliable electricity access, are significant barriers. However, addressing these issues could unlock a profitable return for investors while fostering economic growth and combating climate change on the continent.
According to a report by Energy Capital & Power, the upcoming Invest in African Energy forum, which is set for May 14–15, 2024, in Paris, offers a strategic platform to explore these investment opportunities. The event aims to bridge the funding gap and highlight the potential for high returns in Africa’s evolving green market.
KPMG’s report and the Paris Forum are timely interventions, emphasizing the urgent need to boost climate finance in Africa. They present a call to action for investors to contribute to the continent’s sustainable and prosperous future.
