Growing Investor Interest in African Energy Projects
Global markets are increasingly looking to Africa as a source of diversified energy supply. Rising geopolitical tensions, volatile commodity prices and heightened concerns over energy security have prompted investors to reassess where future power will come from and how resilient those supply chains can be. Andrew Herring, head of energy and power at UK‑based risk and insurance firm Marsh, highlighted these shifts during a recent industry discussion hosted by Marsh South Africa in Johannesburg.
Geopolitical Shifts Driving a New Outlook
Herring noted that Africa is now being viewed through two lenses:
- As a traditional high‑risk market, reflecting long‑standing perceptions of political and operational uncertainty.
- As a strategic option for global efforts to diversify energy supplies away from concentrated, politically sensitive regions.
He explained that rising energy costs, supply uncertainty and broader geopolitical fragmentation are forcing governments, companies and investors to rethink where future energy supplies will originate and how resilient those supply chains are likely to be (Marsh South Africa Energy Discussion, Johannesburg, 2024).
Project Structuring and Regulatory Certainty
According to Herring, the primary barrier to Africa’s energy development is not a lack of capital.
“There is no shortage of capital, the challenge lies in structuring the contract.” – Andrew Herring, Marsh
He emphasized that insurers remain well‑capitalized and are actively involved in supporting energy and infrastructure projects across the continent, offering coverage for political, cyber, physical and liability risks. When risks are clearly defined and allocated appropriately, insurance can enhance a project’s bankability rather than hinder it.
Nevertheless, regulatory clarity, approval processes and execution capacity continue to be persistent constraints. In many African markets, these factors determine whether a project moves beyond the early planning stage to a final investment decision.
Key Opportunities Across the Continent
Interest spans the full energy spectrum—hydrocarbons, renewables and supporting infrastructure.
Southern Africa’s Gas Developments
- Mozambique: The Coral South floating LNG project, developed by Eni with an estimated investment of US$7–8 billion, has been operational since 2022 and serves as a reference point for deepwater LNG development in Africa (Eni Coral South Fact Sheet, 2023).
- Namibia: Emerging gas discoveries are attracting attention from international investors seeking to secure upstream assets.
- South Africa: Proposals for a multi‑billion‑dollar LNG import and power facility at the Port of Durban are still in early stages, but they illustrate the region’s appetite for gas‑to‑power solutions.
Renewable Energy Growth
South Africa remains one of the continent’s leading markets for renewable investment, driven by global decarbonisation targets and a shift toward more distributed power generation. Worldwide, electricity generation is moving away from large central plants toward decentralised systems, which increases the need for storage, network flexibility and backup capacity to ensure consistent supply (International Energy Agency, World Energy Outlook 2024).
Africa’s energy transition is therefore expected to rely on a mix of renewables, natural gas and storage to meet rising demand while preserving system stability.
Role of Insurance and Risk Mitigation
Marsh’s involvement underscores how specialised risk‑transfer solutions can support project viability. By providing cover for political instability, cyber threats, physical damage and liability, insurers help investors quantify and manage exposure. Herring stressed that “insurance should enable projects and not act as a hindrance,” a principle that aligns with best practices in project finance.
Conclusion
While capital is abundant, the real differentiator for African energy projects lies in how they are structured, how regulatory frameworks are applied, and how execution capacity is built. Investors who partner with experienced local stakeholders, secure clear contractual arrangements and leverage robust insurance solutions are better positioned to turn Africa’s energy potential into tangible, bankable projects.
