Sub-Saharan Africa's electricity demand to quadruple by 2040: McKinsey - CNBC Africa

Sub-Saharan Africa's electricity demand to quadruple by 2040: McKinsey

Special Report

by Trust Matsilele 0

McKinsey & Company says it expects the electricity demand to quadruple by 2040. PHOTOS: Electrification Online/thebureauinvestigates

This is against the background of electricity challenges in sub-Saharan Africa. 

McKinsey & Company released the Brighter Africa Report that looks at the electricity demand and possibilities of private sector investment in the energy space.

(READ MORE: US working to power Africa’s electricity goals)

According to the report, inadequate electricity supply slows GDP growth by 1 to 3 percentage points annually and leaves 600 million Africans without electricity.

The report, which comes from the company’s Electric Power and Natural Gas practice, highlights how Africa could meet a demand for electricity that is expected to quadruple in the next 25 years.

McKinsey & Company’s report offers a management perspective on important topics in the energy sector across Africa, including electricity, Grand Inga (a proposed hydroelectric dam on the Congo River at Inga Falls in the Democratic Republic of the Congo), job creation, and the role of natural gas and renewable energies.

It also provides real-world examples from McKinsey aimed at helping governments, private sector investors and multilaterals navigate the sector’s development.

Adam Kendall, principal at McKinsey & Company says the company chose to analyse electricity in the African context because they combine immense social impact with attractive investment opportunities.

“Interest in the topic is growing due to governments’ increased openness to private sector participation, large gas discoveries in East Africa, and initiatives such as the United Nation’s Sustainable Energy for All and the United States’ Power Africa,” said Kendall.

He added that sub-Saharan Africa’s residential and industrial sectors that suffer electricity shortages also struggle to sustain GDP growth.

“In spite of this, we expect electricity demand to quadruple by 2040, creating a nearly 1,600 terawatt-per-hour opportunity. Instead of just forecasting an uncertain future, our analysis attempts to outline and assess the impact of a few extreme development pathways that could meet this demand,” he added. 

(READ MORE: 57% of sub-Saharan Africa is still without power)

“For example, national self-reliance will require more than 830 billion US dollars in investment, however, greater focus on renewable energy, such as solar and wind, would cost 153 billion US dollars more but save 21 per cent in CO2 emissions.” 

Kendall said the stakes are enormous. 

“Indeed, fulfilling the economic and social promise of the region, and Africa in general depends on the ability of government and investors to develop the continent’s huge electricity capacity. This report, which rests on McKinsey’s electric power experience across Africa and in developing countries, serves to help governments, the private sector, and multilaterals navigate the sector’s development over the next 25 years.”