HomeWorksPublicationThe Solar PV Value Chain: An Assessment of Opportunities for Africa in the Context of Energy Transition and the African Continental Free Trade Area
THE SOLAR PV VALUE CHAIN: AN ASSESSMENT OF OPPORTUNITIES FOR AFRICA IN THE CONTEXT OF ENERGY TRANSITION AND THE AFRICAN CONTINENTAL FREE TRADE AREA
The emission of greenhouse gases like carbon dioxide has been observed as a primary contributor to climate change and its devastating impacts. One of the activities contributing to CO2 and other greenhouse gas emissions is electricity/heat production, which forms about 32% of global greenhouse gas emissions. Therefore, the electricity sector’s contribution to emissions makes its reduction through renewable energy technologies an essential condition.
The environmental benefits of renewable energy integration and technological improvements have increased the adoption of renewable energy technologies. As a result, the global renewable energy capacity for electricity generation has increased by over 100% between 2010 and 2020. Also, renewable energy technologies form a significant proportion of many new power expansion projects. Although comparatively low, Africa has also made efforts to implement its energy transition targets and has exponentially increased the installed capacity of renewable energy technologies in its energy mix.
The increasing market for renewable energy technologies presents opportunities for Africa to develop innovative capacities to participate in the technologies’ value chain, which offers several economic benefits. However, the continent’s participation is mainly at the consumption end of the value chain. Consequently, Africa imports most of its renewable energy technologies and remains a continent that has not taken advantage of the energy transition’s economic opportunities. Therefore, exploring how the continent can actively participate in the value chain is relevant for Africa.
The value chain of renewable energy technologies creates opportunities for countries to build expertise and facilitate trade in inputs among states, making regional free trade agreements such as the African Continental Free Trade Area (AfCFTA) essential. Thus, AfCFTA presents opportunities for Africa to participate in the renewable energy technologies value chain through trade in inputs and outputs from each value chain segment.
This report identifies the potential for African countries to develop an integrated renewable energy industry, focusing on solar photovoltaics. It provides pathways for these countries to leverage AfCFTA towards creating a viable market for trade in renewable energy technologies with minimal trade barriers.