Story audio is generated using AI
The formula for developing and financing power projects in Africa has been much the same for many years. A utility procured new generation capacity, a developer built the project, a long-term power purchase agreement (PPA) created revenue certainty and some form of sovereign support helped mitigate risk
For this formula to work, reliability, cost and bankability were essential, but they were largely addressed within a conventional project structure
Recently, there has been a significant shift in this thinking as African power markets have become more diverse, decentralised and commercially complex. Large industrial users are procuring power directly, electricity traders and aggregators are becoming more prominent, and renewable technologies are increasingly being paired with battery storage and other flexible solutions
Coupled with these shifts, many African governments are committing to reforms around wheeling, open access and private power procurement, as well as the development of more competitive regional power markets — all of which require that the definitions of reliability, cost and bankability need to be rewritten
The concept of reliability provides arguably the clearest example of this shift. Historically, reliability centred mainly on the question of generation capacity. The assumption was that reliable supply could be achieved by adding more generation capacity. It was more a question of quantity than quality
Today, the conversation is more complex and demanding because many of Africa’s fastest-growing energy users cannot tolerate intermittent supply, which the grid cannot tolerate without risking instability. Mines, industrial facilities, data centres and desalination plants require near-continuous power to remain competitive, productive and financially viable. In this context, reliability today speaks to the quality of the overall energy solution. The opportunity lies in designing a system that can match generation with demand over time.
Renewable energy is increasingly part of the solution. The International Renewable Energy Agency’s (Irena’s) 2025 “Renewable Power Generation Costs in 2024″ report found that 91% of newly commissioned utility-scale renewable projects delivered electricity at a lower cost than the cheapest new fossil-fuel alternative, with solar PV and onshore wind now significantly cheaper on average
So the question facing developers and financiers is no longer whether renewables can compete on cost; it is how renewable re the reliability expectations of large commercial and industrial offtakers
This is where, and why, the market is evolving. Rather than relying on a single generation technology, projects are increasingly being designed around complementarynce solar production, hydro where available, and portfolios of assets spread across different locations
Traders and aggregators play an important role in this environment by combining generationways achieve. Essentially, a single offtaker cannot procure all this generation by themselves, but through a trader they can access and benefit from the aggregated supply
The same evolution can be seen in bankability. The fundamentals remain unchanged: credible sponsors, experienced developers, realistic development plans, sustainable revenue streams and clear risk allocation. Projects backed by sponsors with a track record, equity capability and the ability to execute are still far more likely to reach financial close
Market reform is even more critical than before to the next phase of African power investment
What has changed, however, is the market in which those fundamentals are being assessed. Traditionally, many African power projects relied on utility offtake, long-term PPAs and sovereign guarantees. That model remains important, but it is no longer the only route to market
In today’s more open African power markets, bankability depends largely on the resilience of private offtake arrangements, the strength of trader and aggregator platforms, the diversity of customer portfolios, and the ability to sell power into a broader market or wheel across the grid if one buyer falls away
This requires a more sophisticated approach to financing in which lenders not only assess whether a single utility can honour a long-term contract but also the resilience of the broader structure
All of this means that market reform is even more critical than before to the next phase of African power investment. When regulation allows wheeling, open access and private power procurement, developers have more routes to market and financiers have more ways to manage risk
South Africa’s private power market shows how quickly investment can follow when large users can contract directly for electricity, while markets such as Zambia, Zimbabwe and Namibia are moving towards models that give private offtakers a greater role. These reforms broaden the buyer pool, reduce dependence on financially constrained utilities and create alternative revenue pathways that can strengthen bankability
However, despite Africa’s energy markets maturing in all these ways, transmission remains the constraint that is most stubbornly hindering forward momentum. Africa doesn’t lack renewable reract capital. But significant limitations persist when it comes to moving power from where it is generated to where it is needed
It is not a uniquely African challenge. The International Energy Agency’s (IEA’s) 2025 “Building the Future Transmission Grid” report shows that the urgency to expand and modernise transmission networks is now placing pressure on global supply chains, with average lead times for cables and large power transformers having almost doubled since 2021
However, for Africa the challenge is especially acute because some of the best renewable reicient transmission capacity, projects risk being delayed, curtailed or prevented from reaching their full commercial potential. This is why regional integration and transmission investment are essential
All of this serves to highlight that the next generation of successful power projects in Africa will not necessarily be those with the highest outputs, the lowest generation cost or the best renewable resources. They will be the projects that effectively align reliability, grid availability, cost and bankability within an ever-changing market structure. That means stronger transmission networks, clearer regulation, credible private offtake, flexible financing models and sponsors with the experience to move projects from ambition to execution.
- Leitich is executive vice-president: power and renewables, client coverage, Standard Bank CIB
