Unleashing Africa’s Nuclear Potential: A New Horizon for Investors

Africa, a continent rich in resources and burgeoning with opportunities, is on the brink of a nuclear renaissance. Over 10 African countries are planning to embrace nuclear energy within the next decade, presenting a unique investment landscape ripe with potential. This article explores the promising prospects in Africa’s nuclear sector from a business perspective.

The Rising Demand for Nuclear Energy

The demand for nuclear energy in Africa is growing at an unprecedented rate. Countries like Ghana, Kenya, and Nigeria among others have already made their national decision to deploy nuclear energy and are progressing with plans. For instance, Ghana is expected to build its first nuclear power plant unit by 2030, while Nigeria is looking to introduce nuclear energy by 2031 and Kenya is working toward having its first operational NPP by 2034. 

South Africa is planning to build a new 2,500-megawatt nuclear power plant and wants to conclude the procurement process by 2024. Uganda aims to start generating 1000 megawatts (MW) from nuclear power by 2031 while adding another 1000 MW by 2040.

Recently, Rwanda has signed an agreement with an SMR company to establish a demonstration reactor within the country, it is expected to be operational by 2026. Similarly Zambia is exploring the nuclear power path with an estimated completion date by 2037. Nevertheless, contrary to Rwanda, Zambia is only considering large reactors at the moment. Egypt’s first reactor, with a capacity of 1,200 megawatts, will start operating in 2028, while all four reactors, with a total capacity of 4,800 megawatts, will be completed and start operating in 2031. 

This surge in interest is driven by the need for reliable, clean energy to fuel Africa’s rapidly developing economies. The rising demand presents significant investment opportunities in both large and small reactors. With several African countries setting clear timelines for their nuclear energy plans, the sector is ripe for investment and growth.

South Africa: Leading the Nuclear Charge

South Africa, the only African country currently operating a nuclear power plant, is planning to add 2,500 MW of new nuclear capacity as part of its Integrated Resource Plan. The two reactors at the Koeberg nuclear power station currently generate over 10 billion kilowatt-hours of clean base load electricity, which is around five percent of the domestic power. It is worth noting that the Koeberg NPP cost is at 44 cents per unit, which is the lowest cost of electricity in the country. The South African Government has expressed the intent to increase its nuclear capacity. This commitment to expanding nuclear infrastructure opens up avenues for investors looking to enter this emerging market.

Sub-Saharan Africa: A Promising Frontier

Sub-Saharan Africa is indeed a promising region for new nuclear investments. More than 9 countries in this region, including Ghana, Uganda, Nigeria, Rwanda, Kenya, Zambia, Sudan, Niger,  Burkina Faso… are considering incorporating nuclear power into their energy mix. 

Ghana is planning to sign a contract for a 1 GWe plant in 2024-2025 and aims to build a unit before 2030. Uganda has acquired land for East Africa’s first nuclear power plant and plans to generate 40,000 megawatts of electricity under the Vision 2040 development plan. Nigeria is expected to develop a nuclear power plant with a capacity of about 2,000 megawatts. Rwanda has signed an agreement with a Canadian-German startup, Dual Fluid, to build an experimental nuclear reactor and are considering SMRs right now. Kenya aims to generate 1 GW from nuclear sources, and by 2030, it plans to have installed a capacity of 4 GW of nuclear energy. Lastly, Zambia is expected to develop a nuclear power plant with a capacity of about 2,000 megawatts.

This commitment by these Sub-Saharan African countries presents a golden opportunity for investors ready to pioneer in an untapped market. It’s important to note that these countries are considering different types of nuclear power programs, ranging from large-scale nuclear power plants to small modular reactors and experimental reactors.

Financing Nuclear Power Projects

Financing a nuclear power project can indeed be challenging for most countries in Africa due to the significant upfront costs and extended periods of construction and testing. However, robust foreign direct investment and advanced nuclear technologies have helped open up opportunities in the sector.

Several financing solutions have been proposed for nuclear power plant construction in Africa. These include government funding of the entire project or government-backed loan guarantees, supported by money from state-owned companies. Other options include intergovernmental loans, corporate financing, financing by plant vendors, special investment vehicles to finance the project, and a “build, own, operate (BOO)” structure.

For instance, Russia is extending a $25 billion loan to Egypt to cover 85% of the cost of the El Dabaa nuclear power plant. The Rosatom packages are popular because the corporation’s sheer size means it can offer all-in-one deals, from training local workers to developing nuclear science curricula, supplying uranium for the plant’s life time and dealing with nuclear waste — with the added plus of Russian state loans for the projects.

However, it’s worth questioning why Western countries are lagging behind in this aspect. Could they offer more competitive financing solutions or technology transfer agreements to win deals instead of Russia or China? This remains an area for potential exploration and engagement. Western countries have traditionally been involved in financing nuclear projects, but their involvement in Africa’s nuclear sector has been limited.

Regulatory Preparation: Setting the Stage for Investment

African regulators are preparing for the advent of nuclear power. They are developing policies and regulatory regimes that provide a conducive environment for investment. This proactive approach by African governments can increase the opportunities for international companies from nuclear mature nations to work with African counterparts for future growth of the sector. AFCONE envisions a multilateral approach toward the regulatory framework preparation which can bring ease.

In conclusion, Africa’s growing commitment to nuclear energy presents a compelling case for investment. The continent’s vast potential, coupled with proactive government policies and international support, creates an attractive landscape for investors. As Africa stands on the cusp of a nuclear renaissance, now is the time for investors to seize this golden opportunity and contribute to shaping the continent’s energy future.