Sub-Saharan Africa, the region with the lowest levels of energy access, needs $350 billion in investment, a fifth of which must be "off the grid", according to a Wood Mackenzie report.
According to the African Development Bank, more than 640 million Africans have no access to energy, which equates to an African country's electricity access rate of just over 40%, the lowest in the world. Per capita energy consumption in sub-Saharan Africa, excluding South Africa, is 180 kWh, compared with 13 000 kWh per capita in the US and 6 500 kWh in Europe.
The evolution of the business model for utilities in sub-Saharan Africa, both on- and off-grid, will fundamentally change the trajectory of global electricity demand and will be important for the energy transition.
According to WoodMac analysts, the continued lack of access to electricity in Africa is partly due to the fact that, so far, there has been little investment in infrastructure. In addition, most utilities in Africa are operating at a loss and lack the capital to expand and improve their energy supply.
Faced with these challenges, Africa can take advantage of lower renewable energy costs and innovative business models, says Wood Mackenzie.
Decentralised grids could not only change sub-Saharan Africa's energy future, but could also provide an important lesson for a new generation of thinking about utility business models around the world.
Africa has a huge potential of 1 000 GW of solar power. However, its actual installed capacity as of 2020 was only 10.58 GW.