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    Sub-Saharan Africa Power Key View


    June 27, 2022 - Fitch Solutions Sector Intelligence

     

      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      Sub-Saharan Africa Power Key View

      • 27 Jun 2022
      • Sub Saharan (Region)
      • Power

      Key View: A total of 27GW of new power capacity will come online in the SSA region over our 10-year forecast period. Ethiopia will account for the largest share of growth as a result of its 6.5GW GERD project coming online. Although thermal power will account for the largest share of total electricity generation in the region, this is largely due to the relative scale of the largely coal-reliant South African power sector. Overall, hydropower will account for the largest share of power output on a market-by-market basis, supplying an annual average of more than 60% of total power output in markets excluding South Africa. High levels of perceived corruption and poor political and economic risk profiles across most markets will deter more risk-averse investors.

      Headline Power Forecasts (Sub Saharan (Region) 2021-2026)
      Indicator 2021 2022f 2023f 2024f 2025f 2026f
      Generation, Total, TWh 417.0 425.9 444.1 460.0 472.7 486.7
      Consumption, Net Consumption, TWh 354.0 361.2 372.1 381.6 389.9 397.8
      Capacity, Net, MW 119,049.9 128,037.1 135,633.5 138,388.8 140,728.4 142,555.6
      f = Fitch Solutions forecast. Source: EIA, IRENA, national sources, Fitch Solutions

      Latest Updates And Structural Trends

      • Total electricity generation in the Sub-Saharan Africa (SSA) region will grow by an annual average rate of 2.3% over our 10-year forecast period, increasing from 408TWh in 2022 to 503TWh in 2031.
      • Ethiopia will be the primary growth driver in the region with a total of 8.9GW forecast to come online over the next decade. This growth will largely come as a result of its 6.5GW Grand Ethiopian Renaissance Dam, which we forecast to be fully online in 2023. South Africa will be the second-largest growth market with 5.9GW of capacity forecast to come online, followed by Angola (2.5GW), Tanzania (2.3GW) and Nigeria (2GW).
      • The largest source of new capacity growth will come from hydropower, which will account for 14.2GW of the total of 28.4GW forecast to come online in the region over the next decade. However, more than 12GW of this growth will primarily come from Ethiopia, Angola and Tanzania.
      • The second-largest source of electricity capacity growth in SSA will be non-hydroelectric renewables with a total of over 12.2GW, of which solar PV will account for more than 8GW. Although we forecast South Africa to account for half of the region's total solar PV growth, we expect that growth in new solar capacity will be spread more widely across the region as opposed to hydropower growth, which will be limited to a handful of markets.
      • We expect that the strong growth in solar PV will be supported by the lower costs of the technology, as well as its scalability and ease of deployment. This will allow governments to provide relatively cheap electricity supply to areas that have previously not had electricity access.
      • The SSA region ranks far below the global average across all indicators in its Industry Risks profile. It is only for its Competitive Landscape metric that the SSA region is not ranked last, as it performs better than the Emerging Europe and Latin America regions. High financial barriers in most markets lead to limited financing options. Poor legal risks, stemming from a lack of a robust legal framework and high levels of perceived corruption, further add to a poor profile.
      This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.

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