Angola Explores Renewable Energy Opportunities Through Diversification

Angola is considered one of the fastest growing economies in sub-Saharan Africa. Despite its economy being largely dependent on the exportation of oil, Angola is starting to explore its renewable potential as a means of diversification. With state objectives concerning electrification, reliance is shifting from the oil sector into renewable energies concerning solar, wind and hydropower. This shift has been a result of new government initiatives as well as increased opportunities concerning renewable energies throughout the country.

“Renewable energy in Angola is a largely untapped area,” said Maria da Cruz, President and CEO of the U.S.-Angola Chamber of Commerce during a webinar hosted by Africa Oil & Power and the African Energy Chamber last week. “The vast amount of natural resources throughout the country have tremendous energy potential and therefore, we have seen an expansion in the exploration and development of renewable energy.”

Angola’s renewable opportunities predominantly consist of solar, wind and hydropower, with potential for further expansion throughout the country. Specifically, the country is estimated to have a capacity of 55GW of solar energy, three GW of wind, and 18GW of hydro. Efforts in hydropower remain the government’s top priority, showcased by the construction of the Caculo Cabaça Hydroelectric Project, the Laúca Hydroelectric Plant, the Balalunga Project and several others throughout the southern region of the country. Paul Ghiotto, Deputy Political-Economic Chief/Energy Officer, U.S. Embassy Luanda stated, “Angola, through the development of hydropower particularly from the Cuanza Basin, has a very strong base concerning generation, potentially sufficient to meet future demand.” Accordingly, the benefits of such resources justify government focus towards renewables.

Following the increase in concentration to renewable energy, the government has set up major targets for the sector through the implementation of the Angola Energy 2025 Plan. Through this initiative, the government not only envisions a developed country with widespread access to electricity, but also a power industry that can compete in the global arena. According to the World Bank, 56% of the population of Angola does not have access to electricity. The Angola Energy 2025 plan, therefore, provides a high-level overview of the policies intended to increase access to electricity to 60%, with 70% of electricity expected to be derived from renewable resources. According to the African Development Bank’s energy sector platform, African Energy and Marketplace, the exploration of resources in the central and southern regions of the country means investors can align with proposed government action plans to contribute to the expansion of electricity access and rural electrification. Furthermore, the proposed plan aims to achieve a total renewable penetration of 74% of installed power capacity, with hydropower representing 66% and other renewables representing eight percent.

“You cannot expand the industrialization of the country without secure power throughout. The government of Angola has invested in the economy with the Angola Energy 2025 agenda, which is robust and seeks to invest in the energy sector,” Maria da Cruz noted. “There is an estimate of around $23 billion that the government would like to invest as part of the Angola Energy 2025 strategy.”

Additionally, the Angola Energy 2025 Plan outlines the country’s long-term energy strategy and gives insight to key areas within the country that have the potential for solar and wind capacity. “The various opportunities for the development of renewable energy throughout Angola, taking into account feasibility studies concerning solar and wind, are in the southern and central regions of the country,” said Frederico Martins Correia, Energy, Resources & Industrial Partner, Deloitte. “Such development will contribute to an increase in installed generation while also boosting electricity access rates.”

There are a variety of external factors that have had a significant impact on the oil and power industry in countries such as Angola. With oil accounting for 90% of Angola’s exports, price instability – emerging from the price war between Saudi Arabia and Russia – as well as reduced demand accompanying the implemented lockdowns worldwide due to COVID-19, have resulted in the country focusing on other energy resources, such as renewables, as a way to fortify economic development and industrialisation. The implementation of lockdowns globally has had detrimental effects on the oil and gas industry, with the price of oil consistently dropping and the industry facing a downturn. However, as the year has progressed, many countries have started opening up their economies again. The pandemic has, nevertheless, brought to attention the need for a revision of the energy sector in countries such as Angola. With the intention of expanding renewable energy development countrywide, Angola seeks to encourage investment not only in the power and energy industry, but in the economy as a whole.