Investor appetite for African energy projects is growing as global markets seek to diversify energy supply, but project execution and regulatory certainty will determine whether the continent captures that opportunity.
Andrew Herring, head of energy and power at UK-based risk and insurance company Marsh, told Business Day that geopolitical instability, shifting trade relations and rising energy security concerns are reshaping how global investors evaluate African markets. His comments come after a recent industry discussion on energy investment trends held by Marsh South Africa in Johannesburg.
“Africa is increasingly being viewed beyond a traditional risk lens. It is also being seen as a strategic option in global efforts to diversify energy supply away from concentrated and politically sensitive regions.”
Speaking on South Africa and Africa’s energy outlook, Herring pointed to the following key aspects: the opportunity or risk for South Africa and Africa due to geopolitical instability, and how to make projects more investable.
He said these dynamics are being shaped by rising energy costs, supply insecurity and broader geopolitical fragmentation, which are forcing governments, companies and investors to reassess where future energy supply will come from and how resilient those supply chains are likely to be.
African energy markets have traditionally been assessed through a high-risk lens, but it is gradually shifting as global markets increasingly emphasise diversification and energy security.
Herring said capital availability is not the main constraint on African energy development. Instead, the challenge lies in how projects are structured and delivered. “There’s no shortage of capital; the challenge lies in structuring contractual arrangements.”
He added that insurers remain well-capitalised and actively engaged in supporting energy and infrastructure projects across Africa, including coverage for political, cyber and physical risks. “Insurance should enable projects, not act as a barrier,” he said.
However, he said regulatory clarity, permitting processes and execution capacity remain more persistent constraints, often determining whether projects move beyond early-stage planning.
This is particularly relevant in African energy markets, where investor interest spans hydrocarbons, renewable energy and supporting infrastructure across the energy system, but execution conditions ultimately determine whether projects reach final investment decisions.
In Southern Africa, gas developments in Mozambique and Namibia continue to attract investor interest, alongside emerging liquefied natural gas (LNG) import and gas-to-power plans in South Africa, including a proposed multibillion-dollar LNG import and power project at Durban port, which remains at an early stage of development.
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Mozambique’s Coral South floating LNG project, developed by Eni at an investment of about $7bn-$8bn, has been operational since 2022 and is widely regarded as a reference point for deepwater LNG development in Africa. Its delivery has helped strengthen confidence in similar offshore LNG developments in the region, alongside other projects that are progressing through planning and approval stages.
Renewable energy investment across Africa continues to expand, with South Africa among the leading markets, supported by global decarbonisation targets and a broader shift toward more distributed power generation.
Globally, electricity generation is shifting away from large centralised power stations toward more decentralised generation spread across different locations. While this improves reliability, it increases the need for storage, grid flexibility and backup capacity to ensure a consistent supply.
Africa’s energy transition is therefore expected to rely on a combination of renewables, gas and storage to meet rising demand while maintaining system stability.
Insurers remain active across African energy markets, providing coverage for political, cyber, physical and liability risks. This, he said, has helped improve project bankability if risks are clearly defined and appropriately allocated.
He said diversification is already shaping investment decisions, particularly in projects that combine multiple energy sources to improve reliability and reduce system risk.
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