Without these two hydro-power megaprojects, the 19 projects currently under construction total just 4.5 GW, compared to 24 projects totalling 5 GW in the IEA’s 2016 report.
Zambia is currently the largest investor in Chinese-added capacity, followed by Nigeria, Angola, Uganda and Côte d’Ivoire. These five countries make up around half of the capacity added or being added by Chinese contractors. In terms of fuel type, 11% of the projects run on natural gas, 9% on coal, and 4% on oil. In the last five years, Chinese contractors completed five coal-fired plants in Nigeria, Rwanda (peat), Zambia, and Botswana for a total of 811 MW.
A greener mix
When the IEA first analyzed China’s involvement in the sub-Saharan Africa power sector in 2016, Chinese companies operating as the main contractor were responsible for almost 30% of capacity additions in the region. Since then, capacity additions by Chinese companies have fallen somewhat, although low-carbon projects represent a larger share.
Of all the newly Chinese-built power plants in the region, 52% are fully-integrated with both a Chinese contractor and a Chinese turbine manufacturer. In total, Chinese equipment manufacturers between 2014 and 2024 are seen supplying more than 9 GW of power generation equipment: approximately 7 GW in hydro, 1 GW in wind and solar PV, and 1 GW in coal and oil.
If Chinese energy infrastructure need to source equipment from overseas, these are mostly gas turbines, a piece of equipment for which Chinese contractors currently rely entirely on foreign manufacturers.
Project finance, combined with EPC
Chinese energy companies in Africa focus mainly on supplying construction services and equipment with engineering, procurement and construction (EPC) being the most common type of project contracting arrangement for construction services. Host country governments issue bids and award projects, and Chinese energy infrastructure companies deliver construction services without having any stake in the project.
Additional electricity capacities fall under public sector spending from a country’s national budget. “This means that project financing remains challenging and tends to shift progressively away from public lending towards more equity financing,” IEA analysts commented.
“However, this remains challenging in the absence of reliable power purchase agreements and adequate, stable local regulation,” analysts said, suggesting “ultimately, the success of a power project depends on the ability of African governments to negotiate, implement and maintain the project.”