Limited access to electricity and frequent electricity outages represent a significant barrier to economic growth and poverty reduction in Africa. More than two-thirds of the population in sub-Saharan Africa lacks electricity, with that figure growing to more than 85% in rural areas. China has become an increasingly important partner in terms of investment in new power generating facilities, and with that Chinese contractors are heavily involved in building this new capacity.
Chinese investment in Africa
GlobalData is currently tracking 242 power projects in Africa for which contracts have been awarded. These projects have a total investment value US$313.1 billion, which includes projects from planning to execution stages. A total of 63 power projects in the pipeline, with a combined value of US$78.1 billion, have Chinese companies as main contractors. The Chinese contractors are responsible for almost 30% of capacity additions and are expected to deliver 53.3GW of generating capacity by 2030, while other contractors are working on projects that are expected to deliver 125.5GW of generating capacity.
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Hydropower projects are still the preferred projects for Chinese contractors; they are involved in 52% of all hydropower projects in the region (in terms of capacity) followed by 29.3% involvement in coal projects and 10.7% in gas projects, according to GlobalData.
The appetite for large hydropower projects by African countries has increased significantly and created an opportunity for Chinese companies, supported by Chinese government loans to become involved in international dam building. This has paved the way for Chinese contractors, such as the China Gezhouba Group and the Sinohydro Corporation, to take on a leading role in international dam building.
Among other renewable energy sectors, China’s Shanghai Electric and Dongfang Electric have won a bid to build a 6GW clean coal power plant on the Red Sea. Dongfang Electric has also awarded a contract to develop and construct a 120MW wind park in the Ethiopian state of Somali. Other major projects involving Chinese contractors include: a 200MW solar farm that will be built by Sinohydro Group in Bui, Ghana; a 100 MW Gwanda Solar Power Plant in Zimbabwe by CHINT Electrics; and the Benban solar farm in Egypt, the world’s largest solar park, which is expected to be fully operational by August 2019.
Power generation projects in Africa, Chinese contractors vs other contractors (capacity additions, MW)
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