For decades, energy has been the line item African manufacturers dreaded most — not because power was unavailable, but because it was expensive, unreliable, or both.
Diesel generators hummed behind factories from Lagos to Nairobi as a permanent, costly insurance policy against grid failure.
That calculus is now changing fast. A wave of captive solar, hybrid gas-renewable systems and new electricity-trading frameworks is giving industrial energy users across the continent a genuine third option: generate or source power independently, at a lower and more predictable cost, while cutting emissions at the same time.
The shift matters because industrials — cement, food and beverage processing, mining, steel, packaging, agro-processing — are Africa’s largest and most price-sensitive electricity consumers.
For many of them, energy can account for a fifth or more of operating costs.
Getting the energy strategy right is no longer a sustainability afterthought; it is now central to whether a plant is competitive at all.
The problem: cost, reliability and carbon, all at once
Industrial power users across the continent have historically faced three overlapping problems.
Grid supply is frequently unreliable, forcing reliance on diesel and heavy fuel oil generation that is both expensive and carbon-intensive.
Where grid power is available, tariffs have been rising as utilities pass through fuel costs, currency depreciation and infrastructure investment.
And increasingly, export-oriented manufacturers and multinationals face pressure from parent companies, financiers and buyers to demonstrate lower Scope 2 emissions.
Nowhere is this more visible than in West Africa, where aging transmission infrastructure and volatile fuel prices have long pushed industrial users onto diesel backup power, exposing them to fuel costs and foreign exchange risk.
The response has been a rapid build-out of what the industry calls “captive” or “commercial and industrial” (C&I) power — generation built specifically to serve a single factory or a small group of industrial off-takers, sized to their load rather than a national grid.
Captive and distributed solar is now the fastest-growing segment
The scale of the shift shows up in the continental numbers. Distributed solar systems — rooftop, commercial and captive installations — accounted for roughly 44% of all new solar capacity added across Africa in 2025, according to the Global Solar Council’s Africa Market Outlook 2026–2029.
Africa added approximately 4.5 gigawatts of new solar capacity over the year, its fastest growth on record, up 54% on 2024, with privately financed C&I projects increasingly rivalling government-backed utility-scale developments as a driver of growth.
Recent projects illustrate how directly this is reaching industrial operators.
In Côte d’Ivoire, Ghana and Senegal, developer Daystar Power has commissioned close to 7 MW of solar capacity across four Nestlé manufacturing plants, part of a wider pipeline that includes a 5.2 MWp facility for a cement producer in Côte d’Ivoire, a 1.9 MWp installation for Olam Agri in Ghana, and a 2.6 MW project for a Nigerian packaging manufacturer.
These are not experimental pilots; they are being built specifically because captive solar can be deployed directly at a factory without waiting on grid connection queues or government-backed power purchase agreements, delivering savings and improved energy security largely from day one.
Food and beverage processing is proving especially well suited to solar, since much production runs during daylight hours when generation and demand naturally align.
Mining and heavy industry, with round-the-clock loads, are instead gravitating toward hybrid solar-plus-engine or solar-plus-battery configurations that pair renewable generation with flexible thermal backup.
| “In most places in Africa, the development of renewable energy capacity is a very competitive solution that industrials can adopt to lower their environmental impact and energy costs.”
— Wärtsilä Energy, on power system decarbonisation in Africa |
Hybrid systems: pairing renewables with gas and storage
Solar alone cannot carry continuous industrial loads without storage or backup, which is why hybrid plants are becoming the default architecture for large energy users, particularly in mining.
In Burkina Faso, the Essakane gold mine now draws power from one of the continent’s largest engine-solar PV hybrid plants, a configuration that has cut fuel consumption by an estimated 6 million litres a year and annual carbon emissions by roughly 18,500 tonnes by intelligently dispatching between solar output and flexible gas or diesel engines depending on load and sunlight.
Gas continues to feature prominently in these hybrid strategies, both as a lower-carbon bridge fuel and as the dispatchable backbone that solar and wind cannot yet provide at continental scale.
At the 2026 Africa Energy Indaba in Cape Town, natural gas was highlighted as a transition fuel capable of supporting electricity generation and industrial development while stabilising energy systems, alongside calls for greater investment in transmission and stronger regional power markets to improve reliability and unlock cross-border trade.
For industrials weighing their own options, the practical lesson from these hybrid deployments is that the right mix depends heavily on load profile.
Daylight-heavy, flexible operations can lean on solar with modest storage; continuous, high-demand operations such as mining and cement need a dispatchable partner — increasingly gas engines or batteries — alongside renewables to guarantee uptime.
South Africa’s wheeling market: buying renewable power without building it
South Africa offers the continent’s most developed example of a parallel pathway: buying renewable electricity from an independent power producer and having it delivered over the existing grid, rather than installing generation on-site.
Since Eskom raised the licensing threshold for self-generation from 1 MW to 100 MW and began enabling third-party wheeling at scale, a wheeling and virtual power purchase agreement (VPPA) market has emerged that lets industrial users contract directly with solar and wind developers for five- to twenty-five-year supply deals, typically at a discount to standard utility tariffs.
Vodacom recently became the first company to fully operationalise “virtual wheeling” in South Africa, aggregating consumption data across more than 15,000 sites to reconcile against renewable generation from an IPP’s solar plant — a model well suited to industrial groups with multiple, geographically scattered facilities rather than a single large plant.
Analysts estimate the country’s renewable energy shift represents an investment opportunity of roughly R161 billion through 2030, spanning utility-scale wheeling projects and behind-the-meter systems.
The catch is grid capacity. Around three-quarters of private renewable energy applications are concentrated in the Eastern, Western and Northern Cape, where transmission infrastructure is now effectively saturated, forcing curtailment measures and slowing new connections even as the National Transmission Company of South Africa works to unbundle Eskom’s grid and open up capacity.
Industry bodies representing electricity traders have warned that fragmented and inconsistent wheeling rules across municipalities remain the single biggest obstacle to scaling the model further — a reminder that regulatory clarity, not technology, is now the binding constraint in South Africa’s most mature market.
What this means for industrial operators across the continent
For plant managers and finance teams evaluating their own energy strategy, five practical considerations stand out from what is currently working across African markets:
- Start with the load profile. Daylight-dominant operations (food processing, packaging, light manufacturing) capture the fastest payback from straightforward on-site solar; continuous or heavy loads (cement, mining, steel) need hybrid solar-storage-gas configurations to maintain uptime.
- Treat energy procurement as a multi-year contract, not a one-off capex decision. Wheeling and VPPA structures, where available, let industrials lock in renewable supply for a decade or more without the capital outlay or land requirements of on-site generation.
- Model foreign exchange exposure explicitly. Diesel dependence exposes operating costs directly to both global fuel prices and local currency depreciation; local solar and gas generation reduces that double exposure.
- Budget for grid and interconnection risk, particularly in markets where transmission capacity is constrained. Confirming grid connection studies and network capacity early avoids stranding a generation investment.
- Where multinational parent companies or export buyers require emissions reporting, captive renewable generation and verified PPAs increasingly double as compliance infrastructure, not just a cost play.
The constraint that matters most: finance and grid, not technology
Across nearly every market surveyed, the message from developers and analysts is consistent: solar, storage and hybrid gas technology are mature, competitive and available. What limits deployment is access to affordable, long-term finance and the physical capacity of ageing transmission networks to absorb new generation.
The continent holds an estimated 60% of the world’s most promising solar resources, yet captured only a small fraction of global renewable energy investment over the past decade, concentrated overwhelmingly in South Africa, Morocco, Egypt and Kenya.
That is beginning to shift. At least eighteen African countries are expected to install more than 100 MW of solar capacity each in 2025 alone, compared with just two countries reaching that threshold the year before — evidence that captive and utility-scale renewable deployment is broadening well beyond the traditional anchor markets.
For industrial operators, the direction of travel is now clear even if the pace varies by country: energy is shifting from a fixed cost imposed by an unreliable grid to a strategic input that can be engineered, contracted and optimised like any other input to production.
This article is part of CCE News’s ongoing coverage of energy, infrastructure and industrial competitiveness across Africa.
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