IEA report: Boosting the power sector in sub-Saharan Africa

November 9th, 2016, Published in Articles: EE Publishers, Articles: Energize


Over the past 15 years, sub-Saharan Africa’s GDP growth accelerated substantially. Growth averaged at 5% per year between 2008 and 2015. It slowed to 3,5% in 2015, but is expected to increase to 4% in 2016. Limited access to electricity is a significant constraint to sustained economic growth across the continent. Chinese companies are increasingly active in Africa and Chinese projects and financial support contribute to power sector development in sub-Saharan African countries, extending energy access and facilitating economic growth. This report describes China’s activity in the sub-Saharan Africa power sector.

This is the executive summary of the report.

The full report is available here

Due to the scarcity of capital and other factors, access to electricity in sub-Saharan Africa still lags behind the rest of the world. Economic growth and living conditions are severely constrained by a lack of power generation and transmission and distribution capacity. Over 635-million people live without electricity in the region.

The sub-Saharan Africa power sector needs greater access to capital funds, technologies and capacity building. Significant investments are needed to massively support power sector development, and ultimately enable economic breakthroughs.

Power projects built by Chinese companies in sub-Saharan Africa have significantly contributed to the region’s power sector capacity expansion in recent years. The People’s Republic of China has become an important source of financing in Africa. Chinese engagement in power covers all primary sources except nuclear, and all sizes of projects, while donors from Organisation for Economic Co-operation and Development (OECD) countries avoid financing large hydropower dams or coal-fired power plants.

This report analyses China’s engagement in the sub-Saharan Africa power sector by examining its recent and planned support for power projects in the region over the 2010-2020 period. It provides an overview of Chinese projects based on a unique dataset, and highlights the current status and major trends of these projects in the first-ever consolidated effort to map them. This study also identifies key Chinese stakeholders and assesses implications for development in sub-Saharan Africa.


Chinese companies operating as the main contractor were responsible for 30% of new capacity additions in sub-Saharan Africa in 2010 to 2015. Greenfield power projects contracted to Chinese companies are widespread in sub-Saharan Africa: more than 200 projects over the 2010 to 2020 time period have been included in the scope of this report. Chinese contractors have built or are contracted to build 17 GW of generation capacity in sub-Saharan Africa from 2010 to 2020, equivalent to 10% of existing installed capacity in sub-Saharan Africa.

In power transmission and distribution, Chinese companies are active in the entire power-grid chain, from cross-border transmission lines like those between Ethiopia and Kenya, to local urban and rural distribution networks, such as in Angola or Equatorial Guinea. Projects by Chinese companies cover almost the entire electricity mix, dominated by hydropower. Renewable sources account for 56% of total capacity added by Chinese projects between 2010 and 2020, including 49% from hydropower.


Chinese-built greenfield projects increase the diversity of the sub-Saharan Africa power capacity mix and accelerate the development of renewables in the region (wind, solar, biomass and hydropower). In a country like Ethiopia, Chinese projects in biomass and waste-to-energy are unique in the region. Moreover, new hydropower dams such as in Gabon or Zambia, and other renewable energy projects such as those in Senegal or South Africa, have helped avoid carbon dioxide (CO2) emissions.

Hydropower has also played an important role in the early stages of electrification in several regions of the world, even though concerns over large dams, including environmental and social impacts, must be addressed. A substantial proportion of Chinese power projects in sub-Saharan Africa are aimed at expanding access to electricity. Over the period 2010 to 2020, a total of 120-million people will gain access to electricity through the power grid, enabled by grid development and increasing power generation capacity, of which Chinese contractors are responsible for 30%.

Expanded access to electricity can in turn facilitate industrialisation and economic development. China also supports rural off-grid solutions with solar energy kits donated in countries such as Rwanda and Comoros. China’s involvement in Africa, as in other regions around the world, bolsters the internationalisation of Chinese companies as well as the government’s “going abroad” strategy.

The current economic slowdown in China and overcapacity in various sectors is impelling Chinese companies to search for new markets overseas. Over 90% of Chinese-built power projects in the region are contracted by Chinese state-owned enterprises (SOEs). Africa is the largest overseas market for some major Chinese energy infrastructure SOEs, which provide integrated services centred on turnkey projects. Africa’s industrialisation and economic development is seen by Chinese stakeholders as important for Chinese exports of manufactured goods in the region.

Generally with Chinese government support, Chinese stakeholders provide integrated solutions in power generation capacity and in transmission and distribution (T&D) through a combination of Chinese development assistance (loans), government-driven investment and equity investment. China’s approach to development assistance differs from OECD countries.

For example, China is not covered by the Arrangements on Officially Supported Export Credits, which guides OECD countries in export credit financing. In the 2010-2015 period, loans, buyer/seller credits and foreign direct investment (FDI) from China for sub-Saharan Africa power sector development (generation and T&D) amounted to around US$13-billion, or around one-fifth of all investments in the sector in the region. Most power facilities built by Chinese companies are financed by Chinese stakeholders, essentially through public lending from the Export-Import Bank of China (Exim Bank).

Construction costs of power plants built by Chinese builders are lower overall than in other parts of the globe but higher than those for plants built in China. Although sometimes challenging in the absence of reliable power off-takers, project financing is increasingly diversified and moving progressively away from public lending. The majority of Chinese-built power projects are still financed by sovereign loans guaranteed by African governments. As more Chinese commercial banks and funds enter the market, the development lending model is trying to progressively switch to more equity financing.

Some Chinese companies operate as independent power producers, as is the case in Ghana. While increasing power generation and grid capacities, and supporting electricity access for economic development, Chinese-built power projects also raise local challenges for African governments, especially in the potential context of higher constraints on the budgets of sub-Saharan African countries. The success of power projects depends on the ability of African governments to negotiate, implement and maintain them.

Outside of China, stakeholders from other countries can also significantly contribute to African power sector development, but the overall success of Africa’s electrification ultimately remains dependent upon the leaders of African countries. In line with the IEA’s policy to further open its doors to emerging economies and to become a global hub for clean energy technologies, it is dedicated to supporting Africa’s electricity sector development.

With more than 1-billion inhabitants and vast energy resources and potentials, the region needs better and wider access to energy to sustain its economic growth and improve living conditions. The deployment of renewable energy such as hydro, solar, and wind can further enable economic development in Africa.


The executive summary of the International Energy Agency’s report “Boosting the power sector in sub-Saharan Africa: China’s involvement” is published here with permission.

The full report is available here

Contact Marc-Antoine Eyl-Mazzega, International Energy Agency,



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