⎪ PowerGen,PetroChem and Sustainable energy management ⎪ Africa's power market is learning to share Shirley Webber, and Nikhil Kasiram, of Absa CIB, highlight how Africa’s energy market is changing: through the unbundling of its electricity utilities and the participation of IPPs in generation and transmission.
vary considerably from one market to the next. South Africa is a notable case, having undergone some of the most significant structural changes on the continent over the last fifteen years. Last year, the government announced that it would pursue private in- vestment for the construction of transmission lines through an Independent Transmission Programme (ITP), having acknowledged that the country needs to modernise and expand its transmission network by roughly 14 000 km at a cost of around R440 billion, capital that the state is not in a position to provide alone. The announcement came months af- ter the long-awaited and heavily scrutinised Electricity Regulation Amendment Act took effect, advancing the restructuring of Eskom into separate generation, transmission and distribution entities while laying the foun- dations for a more competitive electricity market. South Africa has also spent more than a decade developing a successful renewable- energy procurement programme through the REIPPPP, which since 2011 has attracted roughly R272 billion in investment and sup- ported the rollout of 95 projects producing more than 7 300 MW of electricity. Zambia, too, is moving more aggressively towards diversifying its generation mix and strengthening energy security after one of the harshest droughts in recent memory exposed the vulnerability of a system heavily anchored on hydropower. The Electricity (Open Access) Regulations of 2024 now provide for non- discriminatory access to the national trans- mission and distribution network, allowing IPPs to sell electricity directly to large power users and regional markets. Alongside this, the government has adopted a Competitive Procurement Framework for Private Sector Investment in Renewable Energy, a liquidity mechanism to improve project bankability, and standardised procurement documenta- tion to reduce barriers to entry and shorten the time to implementation. This is a market-reform story that has captured the attention of investors seeking long-term opportunities across emerging markets, and there is little to suggest that momentum will slow. Beyond renewable-energy generation itself, one of the first and most obvious areas where investment is likely to be directed is grid modernisation and expansion, whether through extending national transmission infrastructure into high-demand centres or
through decentralised systems better suited to isolated rural areas, where standalone power systems and mini-grids are often more practical. According to the International Energy Agency, financing committed to decentralised energy solutions in sub-Saharan Africa has increased significantly since 2019. Solar home systems and solar mini-grids have also taken off, with installations increasing 12-fold and 45-fold, respectively, over the last decade. But decentralised systems remain under- integrated into electrification strategies in large parts of the region, often treated as transitional or complementary, and companies operating in the space continue to face financ - ing constraints that limit their ability to scale. The energy aggregation market is also drawing increasing attention. Africa installed a record 4.5 GW of solar capacity in 2025, according to the Global Solar Council, with roughly 44% of new additions coming from distributed, rooftop, commercial and captive systems. The continent appears to be entering two parallel energy transitions at the same time: one led by large utility-scale infrastruc- ture and another driven by privately financed distributed systems. This naturally creates demand for aggregation. Outside South Africa, however, the market is still at a very early stage, largely because sophisticated electricity markets depend on institutional infrastructure that many are still developing, including transmission access, wheeling frameworks, settlement systems, interval metering, balancing mechanisms, and standardised market rules. The real opportunity, though, does not stop at how power is generated or moved. Across the continent, much of the underly- ing value sits in the commodities feeding into this system, particularly those linked to bat- tery technologies and the wider renewable- energy industrial base. That ecosystem is already taking shape through the resources being developed, the infrastructure now being financed, and the way parts of the market are slowly connecting. There is optimism in Africa’s energy sector, and many markets are moving in the right direction, though some are progressing faster than others. As regulatory reform continues to lower barriers to entry and make electricity markets more accessible to private capital, the broader direction of travel is becoming harder to ignore. https://cib.absa.africa/
B ritish power developer Gridworks recently signed two landmark agreements with the Government of Uganda to begin construction on the Amari independent transmission project. This is a milestone that speaks to the growing momentum behind private- sector participation in grid infrastructure and electricity generation on the continent. Looking back through history, we find domination by large, vertically integrated utilities built around centralised coal-fired or hydropower generation assets, supported by extensive transmission networks that deliver electricity over vast distances. But in many instances, only the state could afford the scale of capital required to support these assets, particularly at a time when electricity supply was seen as inseparable from industrialisation and economic growth. But by the early 90s, many countries had started exploring the unbundling of genera- tion, transmission, and distribution, with pri- vate participation and competition entering parts of the market under new regulation, resulting in some of the continent’s first Independent Power Producer (IPP) deals coming to financial close before the turn of the century. Over the last decade, though, the global push for the climate transition, particularly following the Paris Agreement, together with far more accessible renewable energy tech- nologies, has helped reignite the market liberalisation agenda across African energy sectors. Uganda is just one example of how countries have begun unbundling their elec- tricity utilities and allowing IPPs to participate in generation and transmission by adjusting their regulatory environments. According to the Center on Global Energy Policy, nearly 87% of African countries now have some form of regulatory framework governing public-private partnerships (PPPs), with around 80% of those reporting frame - works applicable to the energy sector, even though their depth and sophistication still
July-August 2026 • MechChem Africa ¦ 29
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