Africa faces a critical energy access crisis, with a growing reliance on off-grid power solutions masking a deeper systemic failure to expand grid infrastructure. The Africa Finance Corporation’s ‘State of Africa’s Infrastructure Report 2025’ highlights the alarming trend of self-generated electricity surpassing grid capacity in major economies like Nigeria and South Africa, threatening to stall development progress. While initiatives by international institutions aim to connect millions to electricity, the report warns that these efforts may be insufficient unless addressed alongside the fundamental issue of weak and unreliable national grids. The continent’s abundant renewable energy resources remain largely untapped, highlighting the vast but unrealized potential for power generation.
The report reveals a stark reality in Nigeria, particularly in Lagos State, where off-grid capacity, estimated to exceed 19 gigawatts, dwarfs the national grid’s struggling output of 4-5 gigawatts. This reliance on self-generation, driven by unreliable public supply, has become a necessity for millions of households and businesses resorting to petrol and diesel generators. Larger industries are increasingly investing in captive power plants, further highlighting the inadequacy of the national grid. This trend, while seemingly indicative of market innovation, underscores a systemic failure to meet growing energy demands through centralized systems. The high cost of self-generated power, often double or quadruple that of grid electricity, places a significant economic burden on businesses and hinders industrial competitiveness.
South Africa presents a similar scenario, where a policy change in 2022 sparked a surge in embedded power generation, predominantly driven by private investment in solar capacity. While global attention often focuses on renewable off-grid solutions like rooftop solar, the report emphasizes the significant, yet often overlooked, contribution of thermal generation in industrial self-generation. Captive power plants, often ranging from 20MW to 200MW, power mines, factories, and industrial estates, demonstrating a substantial yet under-reported capacity addition outside the national grid. This off-grid boom, while seemingly positive, represents a last resort for businesses and industries forced to seek alternatives due to unreliable grid access.
The report warns that the proliferation of off-grid power, while providing some relief, is not a sustainable solution. It serves as a clear market signal, indicating both suppressed demand and the urgent need for significant investment in reliable grid infrastructure. The high cost of self-generation ultimately hinders economic growth and underscores the economic penalty of underinvesting in grid infrastructure. Africa, blessed with vast untapped energy resources, including hydropower, geothermal, and solar, possesses the potential to overcome this energy deficit. However, these resources remain largely stranded due to weak infrastructure and limited investment, turning abundance into a constraint.
The report further emphasizes the sluggish growth of electricity generation across the continent, which has lagged behind population and economic growth rates. A declining per capita electricity consumption, a first in two decades, signals a deepening crisis, not only in access but also in the capacity to scale power generation. Comparatively, other regions have achieved significantly higher growth rates in electricity generation, highlighting Africa’s falling behind. The limited addition of utility-scale power in Africa compared to other regions further underscores the urgent need for increased investment in generation and supporting infrastructure. The report warns of a potential “low-energy equilibrium,” where access figures may appear to improve, but the reliability and volume of supply remain insufficient to drive meaningful growth.
The report concludes with a stark warning: without a dramatic scale-up in investment, Africa risks being trapped in a vicious cycle of inadequate energy supply. The choice for African leaders is clear: invest decisively in large-scale, affordable, and reliable grid infrastructure or risk hindering the continent’s development ambitions. The current trend, if left unchecked, could result in stagnant electricity access figures by 2030, despite the continent’s abundant energy resources. The report advocates for recognizing the current off-grid boom not as progress, but as a symptom of a deeper problem, a call for urgent action to unlock Africa’s energy potential and drive sustainable development.
