ISSN 2753-7757 (Online)
Angola boosts electrification and renewable
energy
4/9/2024
10 min read
Renewables Net zero / decarbonisation / energy transition
Sustainable energy
The Luena photovoltaic park opened in April 2024 – located in the province of Moxico, in Angola, it has an
installed power of 25.3 MW and was built by Portugal’s MCA Group to supply 59,483 people
Photo: MCA Group
Angola may be a hydrocarbon rich country
in south-west Africa, but it is increasing its
electrification rate and diversifying its
energy sources to meet the United Nations’
Sustainable Development Goals (SDG).
That said, experts warn that private
investment is urgently needed for the
country to maintain this forward-looking
policy, writes Andreia Nogueira.
In 2021, Angola had 5,880 MW of installed power capacity, but only 42.8% of
its 35 million inhabitants had access to the national electricity grid, according
to the Renewables in Angola – national status report, launched in 2022 by
the Angolan Renewable Energy Association (Associação Angolana de
Energias Renováveis – ASAER) and the Lisbon, Portugal-based Lusophone
Renewable Energy Association (ALER). It is a country where of the 37 million
population more than a third, almost 13.5 million, live on less than $2.15/d,
according to the World Bank.
That encourages the use of off-grid renewables, with the World Bank authors
noting that: ‘The commitment to new renewables is reinforced by the
dispersion of rural settlements, and by the fact that the transmission grid
connected to the major producing plants still does not reach all the provinces.’
The Bank adds that the ongoing work to connect all the provinces to the
country’s electricity distribution system is not economically sustainable,
especially considering the low population density.
The International Energy Agency’s (IEA) Lead Energy Access Analyst
Gianluca Tonolo also sees more growth opportunities for the sector. He says
that considering almost 15% of Angola’s households own a gasoline or diesel
generator for either grid back-up or primary electricity supply, ‘there is a big
opportunity to switch to solar photovoltaic (PV) home systems and mini-grids’.
This is especially so, given that the government is gradually phasing out
gasoline subsidies, and solar PV systems with batteries are becoming
increasingly economically viable for families. While currently, he adds ‘only
few households’ have a solar PV system in Angola, leaving a relevant space
for growth.
In its National Development Plan 2023–2027 the Angolan government
envisioned an on-grid electrification rate increasing to 72% in 2050, with the
share of renewable energies in power production, including hydroelectric,
increasing from 64% in 2022 to 94% in 2050.
Victor Fontes, President at ASAER says that this lack of transmission has left
the country with excess power production, ‘with the country currently having
an installed capacity that is much greater than the demand’. Moreover, recent
production investments have been green. ‘This investment has mainly been
made in renewable energy,’ he says.
Fontes adds that today the total installed capacity for electricity production in
the country is 6,129 MW, with ‘a clear predominance of renewable energies
(hydro and solar PV)’; 3,793 MW involves hydro production, 1,983 MW
thermal production from natural gas and diesel, 14 MW hybrid production
(solar and diesel) and 337.5 MW solar production.
‘In addition to hydro, photovoltaic is the sector that appears most favourable
[for investments], given the existing potential, with levels of solar irradiation
that are among the best in the world,’ says Fontes.
Rita Marouço, Project Manager at ALER, says that Angola is achieving its
goals, ‘with the installation of new solar and hydro plants that this
year actually supplied 91% of the electricity consumed in Angola, and much of
the thermal park on stand-by’.
She considers that Angola is a good example of the renewable energy
transition because ‘the renewable combination of hydro plus solar has
already made it possible to “dethrone” thermal power plants’.
‘In addition to hydro, photovoltaic is the sector
that appears most favourable [for investments],
given the existing potential, with levels of solar
irradiation that are among the best in the world.’ –
Victor Fontes, President at the Associação
Angolana de Energias Renováveis (ASAER)
Oil and gas as a crutch for renewable energy
To keep growing sustainability in its National Development Plan 2023–2027,
the Angolan government set several goals, including ‘to explore opportunities
to monetise renewable potential and production capacity’ and ‘approve
specific legislation for the renewable energy sector to increase private
participation...’.
The government also wants to implement a green hydrogen project run by
Angola’s national oil company Sonangol and the German firms Gauff and
Conjuctta. The project at the Barra do Dande marine oil terminal, close to the
capital Luanda, will use 400 MW of electricity generated from a 2 GW
hydroelectric plant, making green hydrogen for local consumption and
export to Germany.
The document also includes plans for ‘the participation of the oil and gas
sector in the national decarbonisation process’, accepting that it ‘will continue
to be one of the main drivers of the economy’, while it seeks to reduce its
greenhouse gas emissions.
According to the Energy Institute’s latest (2024) Statistical Review of World
Energy, Angola is second only to Nigeria as sub-Saharan Africa’s largest oil
producer, producing 1.15mn b/d of oil in 2023 compared to Nigeria’s 1.54mn
b/d. It is among the top main natural gas producers in sub-Saharan Africa, so
debarbonisation efforts could have a significant impact.
The plan seeks to achieve this through more efficient operations, optimising
‘fiscal and operational conditions to attract and retain private investments’ and
helping this transformation.
Marouço says that oil and gas ‘generate almost three-quarters of the
country’s export revenues, but they have a marginal weight in electricity
production’. Indeed, she suggests that ‘the challenges of bringing electricity to
the entire population… could be partially addressed by cross-financing
revenues from the exploration and export of fossil fuels’.
Private investment needed
While this earns the government money which it can spend on developing
renewables, Fontes argues that more private investment is needed. He gives
the example of a 25 MW solar PV plant which was launched last year (2023)
in Namibe, south-west Angola, by a consortium, Solenova, that includes the
Italian oil and gas company Eni, the UK’s BP and state-owned Sonangol.
Next year, a new private 35 MW solar plant will be in place thanks to France’s
Total Energies, Sonangol and Angolan company Greentech.
Fontes also wants to see a regulatory update for renewable energy, ‘in
particular for green mini-grid solutions and solar home systems, essential for
rural areas’, he says.
He wants a system that attracts private investment for distribution, ‘which
mainly implies a tariff reform’, as Angolan distribution tariffs are low and
subsidised. That stifles earnings, with the fixed tariff of Angolan Kwanza
AOA14 /kWh ($0.015 cents/kWh), explaining that this means ‘all projects
must have a set of guarantees that only the state can assume, which makes
the process not very expeditious’.
Moreover, Fontes warns that more efficient solutions are needed, ‘with lower
costs per connection point, so that the investment can reach a greater
number of beneficiaries’.
He calls for a competition strategy with private players and ‘clear rules,
allowing the use of optimised solutions, adapted to each location’.
Marouço agrees that more legislation is needed, such as establishing a
National Rural Electrification Fund, which was planned several years ago to
electrify rural areas with public funds. Adding that such reform should also
include private capital ‘through the attribution of concessions and/or support
for mini-grids and home solar systems (solar kits) to the private sector’.
Recalling that there is a ‘social tariff’ to help the population with fewer
resources to pay the bills, Marouço warns that: ‘If the tariff for other types of
consumers is not revised, particularly for industry, in order to support all the
costs of production, transport, distribution and marketing, the sector will not
be sustainable and will hardly be able to support the investments necessary
to guarantee a universal and quality access to the entire population.’
She adds that the electricity sector is also financially unsustainable ‘because
many consumers do not pay for the electricity they consume’, therefore she
also suggests the installation of more prepaid meters.
Marouço adds that there is a need for ‘new decentralised production and
distribution structures’, which requires large investments. Private investors
should distribute electricity with mini-grids, ‘from the moment it will be
possible to grant a concession to a private party for... generation, distribution
and commercialisation of electricity in a given area’.
Furthermore: ‘Private investments... will allow electricity to be transported to
new regions, even if they later require investment in distribution.… They will
generate new financial flows that can make public companies more
sustainable and will allow them to invest in distribution,’ she says.
Marouço wants to see law reforms to open private investment for
transmission projects, including [international] interconnections, allowing
independent producers to access more clients.
She adds that Angola, like fellow Lusophone (Portuguese-speaking) southern
African country Mozambique, ‘aims to become a producer of renewable
energy in the region through the development of new transmission lines that
can connect the country with its neighbours and, consequently, supply them
with surplus electricity from new renewable plants’.
‘To attract private investment, it is necessary to open the market through the
establishment of energy purchase contracts… in which the state grants the
concession of electricity production to independent energy producers.’ She
points out that: ‘We are aware of several companies with interest and
willingness to invest in renewable generation projects in Angola, waiting for
the government... to decide to implement contracting procedures for
independent producers in accordance with international rules.’
Considering the risks of investment in this segment besides the lack of
regulation, and high interest rates (base rates have been 19.5% since May),
Marouço suggests ‘the creation of payment guarantees by the Angolan
government for investors and new financial models that allow for the recovery
of investment, given current low electricity tariffs for end consumers’.
In early July (2024), João Baptista Borges, Minister of Energy and Water, was
quoted by the Angolan press as saying that legislation is being created which
will allow more independent production and tariffs that reflect lower costs. He
mentioned the imminent creation of an electrification agency to give rural
energy projects economic viability, supported by multilateral sources of credit.
In November 2023, Luanda and the European Union (EU) also signed a
Sustainable Investment Facilitation Agreement, the first EU agreement of its
kind, in response ‘to Angola’s ambition to diversify its economy beyond the oil
and gas sectors, which historically attracted most foreign investment’. Among
the confirmed opportunities for investments are green energy, according to
the European Commission.
With such rich natural resources to produce clean energy, such policy and
legislative reforms in Angola may boost investor’s confidence in this emergent
and promising renewables market.
Further reading: ‘Light at the end of the tunnel: solar mini-grids are the
solution to energy access’. Affordable, reliable and clean energy is
essential to sustainable human development. Ensuring everyone has
energy access by 2030 is the seventh United Nations Sustainable
Development Goal (SDG 7). However, some 685 million people had no
electricity and 2.1 billion had no clean cooking fuel in 2022. Connecting
this considerable demographic to renewable energy that won’t harm their
health or the environment is a major challenge.
Top low-carbon innovators from Africa claimed every international
category in the 2024 Ashden Awards, an annual scheme that
recognises green jobs, skills and livelihoods from the public, private and
non-profit sectors in the UK and the Global South.
