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China’s Renewable Energy Empire in Africa: Lifeline or Debt Trap?

CRISIS - Atmospheric CO2 Levels by Mitota P. Omolere Africa Sep 7th 20235 mins
China’s Renewable Energy Empire in Africa: Lifeline or Debt Trap?

China has emerged as a renewable energy kingmaker across Africa. Billions invested in mammoth hydro, solar, and wind projects are helping turn the continent’s immense clean energy potential into reality. But China’s glittering promises hide shadows. Unsustainable debts, environmental damage, and joblessness plague certain projects, fuelling a backlash. Still, amidst crumbling public finances and energy poverty, African nations have few alternatives to China’s investments. Walking a tightrope between energy security and debt traps, African leaders must leverage China’s equitable and sustainable development proposals. With astute planning and negotiations, these ventures could electrify millions, create jobs, and set new global standards for South-South cooperation.

Over the past decade, China has become a significant investor in renewable energy projects across Africa. With abundant solar, wind, and hydropower resources, Africa has enormous potential for renewable energy development. At the same time, most African countries face acute energy shortages and rely heavily on fossil fuels for electricity generation. This alignment of Africa’s needs and resources makes the continent an attractive destination for China’s renewable energy investments.

Trends in China’s Investments

According to a 2021 report by the African Climate Foundation and Natural Resources Defence Council and The Boston University Global Development Policy (GDP) Centre, China has financed over $13 billion and developed over 10 gigawatts of clean energy capacity across Africa since 2000. Chinese investments in renewable energy in Africa grew at an average annual rate of 26% from 2010 to 2020, with solar, hydropower, and wind being the top three technologies.

Ethiopia exemplifies the trend of growing Chinese investments in African renewables. Chinese companies have funded and developed major hydropower dams and wind farms in the country over the past decade. China invested over $4 billion in Ethiopia’s energy sector between 2011 and 2018, accounting for over 50% of new power generation capacity. Recently, the African nation and China agreed to establish a centre to develop Ethiopia’s renewable energy potential, further cementing this cooperation.

Kenya is another primary recipient of Chinese investments in renewables. China has financed and built large solar and wind farms across Kenya, helping expand renewable energy access, particularly in rural areas. Most notably, the 310 MW Lake Turkana Wind Power project was constructed by a Chinese firm and represents the largest wind farm in Africa today. This project came online in 2017, providing 15% of Kenya’s electricity capacity.

You might also like: China On Track to Meet Clean Energy Target Five Years Ahead of Schedule: Study

What Pushes China to Invest in Renewable Energy in Africa?

China’s generous investments in African renewables reflect several motivations.

  1. China’s domestic solar, wind, and hydropower industries needed international opportunities as the domestic market was saturated. Exporting equipment and services to Africa created new growth avenues.
  2. Financing renewables in Africa nicely aligns with China’s broader aid and development efforts, burnishing its image as a partner in African development.
  3. China is investing in Africa with an eye on its energy security. With its economy growing at breakneck speed, China has become increasingly dependent on imported oil and gas. Investing in African renewables helps China diversify its energy sources and reduce reliance on fossil fuel imports. According to Sustainable Energy for All, nearly one-third of China’s oil imports came from Africa in 2019. So, investing in African renewables is “an integral part of China’s energy security strategy,” as one expert noted.
  4. China sees significant commercial opportunities in Africa’s underdeveloped power sector. Sub-Saharan Africa’s electricity access rate is just 43%, and most grids are unreliable. China creates new markets for its construction, equipment, and engineering companies by funding power generation, transmission, and distribution projects. Renewables’ decentralised nature also allows China to build mini-grid and off-grid solutions, reaching rural areas that may not benefit from centralised national grids.

Impact on Africa’s Energy Mix

China’s investments significantly shape Africa’s energy mix and help many countries transition towards renewable electricity. Since 2000, China has helped finance and develop around one-third of new grid-connected renewable capacity in sub-Saharan Africa since 2000.

In Ethiopia, mainly, Chinese investments have been transformative. Renewables constitute nearly 90% of the country’s installed power capacity, up from just 33% in 2010. With further renewable projects in the pipeline backed by China, Ethiopia is on track to meet its ambitious goal of increasing generating capacity by 25,000 MW by 2030: 22,000 MW of hydro, 1,000 MW of geothermal, and 2,000 MW of wind by 2030.

While data limitations make continent-wide assessments difficult, China’s investments have meaningfully expanded renewables’ share in Africa’s power mix, suggesting that investments have facilitated a structural transition.

However, this energy transition has been uneven across countries. Those most reliant on hydropower – like Ethiopia, Zambia, and Uganda – have seen a dramatic shift towards renewables, while countries dependent on fossil fuels, like South Africa and Nigeria, have been slower to move despite Chinese renewable investments. Going forward, ensuring fair and inclusive energy transitions across Africa remains a key priority.

Concerns and Challenges

Concerns persist about the nature of China’s energy investments in Africa. There are worries that China mainly exports equipment and construction services rather than building local manufacturing capacities. Additionally, Chinese companies have faced criticisms around labour rights violations and local content requirements. Zambia’s large hydropower projects funded by China, for instance, have faced protests by Zambian workers over poor working conditions. According to the United Nations University, Chinese projects in Africa often seem to go hand in hand with civil protests.

Map of Chinese projects and protests in Africa between 2000 and 2014. (Chinese projects in green; meetups in red) Iacoella, Martorano, Metzger, Sanfilippo (2021) image: https://unu.edu/ 

Map of Chinese projects and protests in Africa between 2000 and 2014. (Chinese projects in green; meetups in red) Iacoella, Martorano, Metzger, Sanfilippo (2021). Image: United Nations University.

The environmental and social impacts of projects like mega-dams also require careful evaluation. And expensive deals structured around energy exports back to China.

Furthermore, the costs of some Chinese-backed renewable energy projects have provoked worries around African countries taking on unsustainable debts. In 2020, Kenya rejected China’s involvement in the Lamu coal project partly due to overpricing concerns and environmental and health effects amongst the locals. Recently, Zambia saw protracted negotiations with China over debt restructuring for its power sector.

However, China has taken some steps to address these criticisms. At the 2018 Forum on China-Africa Cooperation, President Xi Jinping pledged to support skills training for Africans and increase local content requirements for projects. During the G20’s Debt Service Suspension Initiative in 2020, China cooperated closely with African nations, freezing debt repayments for countries facing liquidity shortfalls.

China must focus more on local job creation, environmental sustainability, and affordable financing to avoid backlash against its African investments. African governments also need better capabilities to evaluate proposals from China and negotiate equitable deals serving their development needs.

What’s Next?

Despite these challenges, China’s renewable energy investments represent a vital lifeline for African countries seeking to grow their economies sustainably and leapfrog fossil fuel-dependent development. Africa still has an estimated renewable energy potential of over 470 gigawatts, of which only a tiny fraction has been realised. With supportive policies and grids upgraded to handle intermittent solar and wind, renewables can eventually far outstrip fossil fuels across the continent.

Joint research between African and Chinese institutions can unlock new technologies and business models tailored to the region. In 2021, China and Africa cooperated to launch a new sustainable energy centre focusing on mini-grids and clean cooking. With proper safeguards around transparency, debt sustainability, and local content, China and Africa can build partnerships that accelerate an inclusive, green energy transition across the continent.

You might also like: China’s Energy Transition: Is the World’s Largest Polluter Doing Enough?

About the Author

Mitota P. Omolere

Mitota is an Environment, Health, and Safety (EHS) Specialist passionate about sustainability. With a first degree in Industrial Safety and Environmental Technology, he has over 4 years of experience implementing EHS and quality management systems across industries. He Loves to volunteer for youth-led sustainability initiatives. With interests in Environmental sustainability, climate change, Energy, health, and safety, he actively writes on these topics to share insights.

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