How Africa's grid is being rewired for factories over poor households

Some of the beneficiaries of the commissioned electrification project at Sirandu Village in Gem constituency by Energy and Petroleum CS Opiyo Wandayi on February 24, 2025. [Isaiah Gwenji, Standard] African energy ministers are quietly rewriting the rules of the power market. In public, they talk about "universal access." Behind closed doors, they talk about who can actually pay. At the recent Accelerated Partnership for Renewables in Africa (APRA) Forum in Freetown, Sierra Leone, the discussion was blunt. Households cannot absorb high electricity tariffs. State utilities are broke. But mining firms, smelters and fertiliser plants can pay and in foreign currency. So governments are redesigning energy markets around them. "We have opened the market beyond the single-buyer model," said Dr Gloria Magombo, Deputy Minister of Energy, Zimbabwe. "Private producers can now sell directly to large intensive users, including mineral smelters earning in forex. That brings certainty for investors and lenders." It's a quiet revolution with deep consequences for Africa's energy future. Across the continent, nearly 600 million people still lack electricity. Yet, ministers at APRA spoke mostly about megawatts for industrial corridors, not for homes. In Sierra Leone, Dr Kandeh Yumkella, Chairman of the Presidential Initiative on Climate Change and Renewable Energy, said the mining sector alone will need 500 megawatts more power in the next six years equal to the combined consumption of several small African nations. "This is not about rural electrification," he admitted. "It's about baseload for extraction and processing." Sierra Leone is pitching itself as a regional hub where independent power producers (IPPs) can build plants to supply Guinea, Liberia and beyond a potential 60-million-person demand zone driven largely by mining and manufacturing. In Ghana, Dr Senalor Yawlui, High Commissioner of Ghana to Sierra Leone, described a similar shift. The government's renewable master plan is tied directly to its 24-hour economic agenda powering manufacturing, battery assembly and electric vehicle production. "Renewables must feed green industrialisation and job creation," said Yawlui. "That is how we make the transition pay for itself." The logic is simple. Investors finance power plants only when they know who will buy the power. Households are not "bankable." Political utilities with arrears and frozen tariffs are not bankable. Mines and factories are. Developers at the forum said financiers now ask one question first: who is your offtaker? If the answer is "a national utility," the deal often collapses. If the answer is "a mining company exporting gold or lithium," the deal moves. "We need to give confidence to the offtaker," Magombo said. "When you allow every customer to prepay, you give investors confidence that the money will be collected." Some countries are going further. Zimbabwe is using domestic insurance and pension funds to back "bankable" projects after international lenders deemed it high-risk. That means ordinary workers' retirement savings are now tied to power plants serving industry first, with the political promise that households will benefit "later." The APRA forum laid bare the imbalance. In 2023, Africa attracted only US$15 billion in renewable investment about 2.3 per cent of global totals. The continent needs US$70 billion annually to meet its energy transition goals by 2030. Of that limited finance, 58 per cent came from public funds and only 42 per cent from private investors. Private financiers are deterred by political risk, weak utilities and uncollected bills. That's why governments are trying to de-risk the market through direct industrial power purchase agreements (PPAs), foreign exchange guarantees and revenue insurance. Ghana, for example, is creating a Renewable Energy Investment and Green Transition Fund to "de-risk private participation." Sierra Leone's government has approved a US$108 million gas-to-power project and is using the Millennium Challenge Corporation's US$484 million grant to fund new transmission lines. Zimbabwe has raised US$70 million to expand its hydropower capacity and another US$9 billion in identified projects for generation, transmission and distribution. Every minister agreed on one painful truth: utilities are the weakest link. They owe producers millions, lose up to 40 per cent of generated power through theft and technical losses, and face political pressure to keep tariffs low. "If utilities are bankrupt and losing money, no investor will come," said Yumkella. "We have to reform them or we kill the sector." Reform, however, is politically explosive. When Mexico tried to unbundle its national utility, union workers went on strike. African ministers fear the same backlash. Prepaid smart meters now being rolled out across cities are one response. They prevent arrears but also expose the poor to disconnections when they cannot pay. "The power is not free," said Antonio Manda, Deputy Minister of Minerals and Energy, Mozambique. "Government subsidies hide the real cost, but in the end, someone pays." Energy poverty remains Africa's biggest development gap, yet the ministers' solutions now rely on industry cross-subsidising households. Industrial PPAs provide the cash flow; pension and insurance funds provide the collateral. Households come last in the sequence politically visible, but financially invisible. Magombo said: "We are not just powering homes. We are powering factories that will employ those in the homes." Critics argue that approach repeats the colonial pattern exporting raw value chains while communities remain in the dark. Supporters counter that without industrial revenue, there will be no grid to connect anyone to. The tension defines Africa's energy transition today. Africa holds 30-40 per cent of the world's critical minerals, lithium, cobalt, titanium and bauxite, essential for solar panels and batteries. Yet most of its solar hardware and battery storage systems are still imported. Ministers now frame in-continent manufacturing as a political condition for any new deal. "There will be no global energy transition without Africa," said Yumkella. "But we want to retain value. We want to be the hub for building batteries and solar panels." That ambition comes with a cost. New industrial energy parks demand reliable power often gas-fired or grid-connected renewables long before villages see their first electric bulb.

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