Home > News Articles > Renewable Developments Accelerate Angola''s Energy Transition
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Angola – sub-Saharan Africa''s third-largest economy, a major oil exporter and OPEC member – has placed increased access to electricity as a top national priority, targeting 9.9 GW of installed generation capacity and a 60% electrification rate by 2025. Despite reliance on offshore oil resources – accounting for 30% of the country''s GDP and representing more than 95% of total exports and 52% of fiscal revenues – the country is strongly committed to the use of renewable energies to support the national electricity system.
Currently, Angola has an installed energy generation capacity of 6,143 MW, with 56% accounted for by hydro (3,440 MW), 12% by gas (750 MW), and a combination of solar, wind, biomass and waste accounting for 32% (1,965 MW). The current electricity access rate in the country is 45%, with a 65% electrification rate in urban areas and six percent in rural areas. However, mapping studies conducted in 2014 revealed the potential for 55 GW of solar power in the country, 3 GW of wind power and 18 GW of hydropower.
Despite this potential, Angola faces several challenges that must be addressed, including the creditworthiness of utilities, cost-reflective tariffs and the local currency risk. However, large-scale projects implemented since 2017/18 have contributed greatly to Angola''s energy transition. The Soyo combined-cycle natural gas plant and the Laúca hydroelectric power project have added 750 MW and 2.1 GW, respectively, towards diversification of the country''s energy matrix.
As the Angolan population increases and its economy grows, energy demand is projected to increase from 103,000 barrels of oil equivalent (BOE) in 2020 to 270,000 BOE by 2035 and 660,000 BOE by 2050. In a bid to meet rising demand and electrification targets, Angola is, therefore, opting for the integration of renewables with fossil fuels into its energy transition.
Renewable energy sources are well-suited to meet rural demand – where grid connectivity is not feasible – through the development and implementation of micro- and mini-grids. In June 2019, Italian energy company Eni collaborated with Angola''s national hydrocarbons company Sonangol to develop Solenova, a joint venture to implement renewable energy projects in the country. The venture''s first project comprises the installation of a 50-MW photovoltaic (PV) plant in Angola''s southern Namibe Province. In September 2019, Minister of Energy and Water H.E. João Baptista Borges announced Angola''s plans to incentivize the private sector to install 30,000 solar PV off-grid systems in the country''s rural areas for the production of 600 MW of solar electricity by 2022.
In addition to hydro and solar, there is a substantial opportunity for Angola to develop its wind energy potential. The SEFA appraisal report has indicated that 100 MW could be generated from two to five wind farms in the southern part of the country.
The Government of Angola has implemented an Energy 2025 Vision plan, a comprehensive framework for the expansion of the country''s electrification rate to 60% and the increase in installed capacity to 9.9 GW by 2025, using 66% water sources, 19% natural gas, eight percent renewable energies and seven percent thermal energy. The Government has forecast that under the plan, the energy sector will receive $23 billion in investments – $12 billion in generation, four billion dollars in transmission and $7.5 billion in distribution. Accordingly, the plan envisions that renewable energy will constitute 70% of the country''s installed capacity.
During the 2021 Angola+Green virtual seminar, organized by the Portuguese presidency of the Council of the European Union, H.E. Minister Borges identified diversification of the energy mix and universal access to electricity as a priority for the Central African country. What''s more, in order to attain a universal electrification rate of 60% by 2025, Power Africa and the African Development Bank are working with the Government of Angola to develop and expand infrastructure and facilitate new electricity connections. The collaboration will also evaluate 1,000 MW of potential energy throughout the country to improve access to electricity and strengthen the sector''s financial viability.
On its current trajectory, Angola is on track to see its electrification rate increase to 52% by 2030, 68% by 2040 and 80% by 2050, according to the Institute for Security Studies. Without additional effort or investment, the country will not be able to increase the national electricity rate to 60% by 2025.
The majority of Angola''s population with access to electricity are situated in the country''s 18 provincial capitals, with 70% being in Luanda. According to the United Stated Agency for International Development (USAID), the costs of electricity supply in Angola are very high at $220 per MWh distributed, which is 60% higher than reference values. High variable and investment costs, technical losses and increasing network unavailability, combined with the inadequacy and inefficiency of the country''s generation infrastructure, have proved a challenge for Angola''s energy transition.
In order to offset the high costs of electricity supply, the Government of Angola has implemented an intensive subsidy policy to compensate operating companies and protect consumers from paying the overwhelming cost of electricity due to the populations over-reliance on diesel generators combined with inefficiencies within the sector''s infrastructure. Additionally, in order to unlock its renewable energy potential, Angola will require the implementation of private investments combined with the establishment and institutionalization of relevant frameworks to reach the targets envisioned in its 2025 Vision plan.
In light of these challenges, the Government of Angola has formally requested assistance from SEFA to encourage private investment into renewable energy generation in order to reduce the country''s reliance on its depleting fossil fuel resources. SEFA has agreed to provide technical assistance to develop an enabling environment for Independent Power Producer/Public-Private Partnership projects and address capacity-building issues on procurement, design implementation and monitoring.
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