Chinese firms play a major role in providing electricity for Africa

12 July 2016

Chinese companies are playing a huge role in bringing electricity to sub-Saharan Africa and can take credit for 30% of new capacity in the region, according to a study,Boosting the Power Sector in Sub-Saharan Africa: China’s Involvement, published this week by the International Energy Agency (IEA).

While over 635 million people still live without electricity, Chinese companies channelling state funds into all different types of power stations will have brought light and power to around 36 million people by 2020. The IEA finds that China invested ±$13bn between 2010 and 2015 in power projects, as China’s contribution dwarfs that of any other non-African country.

Over half of all power projects are based on renewable sources, of which most are hydropower, the study reveals. China also provides off-grid power with solar energy kits. China’s involvement in Africa bolsters the internationalisation of Chinese companies, in line with the government’s “Go Out” policy initiated in 1999 and the current economic slowdown in China impels 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.

According to the IEA, 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. However, sub-Saharan Africa has ample primary energy resources to meet this demand: recoverable oil resources will last for the next 100 years, coal for over 400 years and gas for 600 years, and renewable energy sources (geothermal, hydro, wind and solar) are abundant. 

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