Africa Energy Opportunities

Jeff Siegel

Written By Jeff Siegel

Posted July 11, 2011

Last week, the Twitter feeds were overrun with venomous comments about the Casey Anthony trial. No one seemed too excited that she was found not guilty of murdering her two-year-old daughter.

But to be honest, I didn’t really pay any attention to the trial. I didn’t even know the specifics of it until someone explained them to me this past weekend.

Yes, I know it was front-page news… but it really didn’t affect me in any way, so I wasn’t following the story.

No, last week I was more consumed by a bit of much more important news.

And I can assure you this bit of news will have a much greater impact on all of us than a media-frenzied trial that trivialized the death of a little girl and exposed a flawed justice system.

Transitioning the Global Energy Economy

According to the latest data from the United Nations Environment Program, investments in renewable energy reached a record $211 billion in 2010. And for the first time ever, that investment grew more in developing economies than in developed economies.

This is a very big deal.

Of that $211 billion, $72 billion was traced back to faster-growing developing nations, while developed economies only accounted for $70 billion.

Not surprisingly, China accounted for $48.9 billion in new investment in renewables. This represents a 28 percent growth over 2009.

Also boasting strong growth:

  • South and Central America – up 39% to $13.1 billion

  • India – up 25% to $3.8 billion

  • Middle East and Africa – up 104% to $5 billion.

Of particular interest to us is Africa.

We’re already well-positioned to profit from the solar boom in China and new wind development in the United States. New transmission in Texas and the Midwest is actively being built right now to facilitate an enormous amount of wind power. This will be coming online by the end of the decade.

But Africa is also starting to look more and more attractive for those seeking to get in early on yet another developing renewable energy market.


Profiting from African Energy

Africa is in an interesting position in that there’s very little electric infrastructure already in place.

More than 80% of citizens don’t even have access to electricity. Basically, many parts of Africa are starting from square one. And this means they can build an infrastructure that won’t have to rely exclusively on fossil fuels.

Of course, natural gas and coal will be a part of the mix. That’s a given. But because of Africa’s immense solar and wind resources, the demand for long-term stability will dictate that those resources be utilized to their fullest extent.

Africa is still the poorest continent on the planet, but its economy is picking up steam. And in order for growth to continue, energy demands will intensify.

With an abundance of land that can be used for solar and wind farms — and with renewables actually being cheaper than conventional sources in many regions — this continent is ripe for renewable energy opportunities.

Certainly some of the world’s largest corporations are paying attention and spending billions to lay the early groundwork for renewable energy development in Africa. These include (but are not limited to):

  • Abengoa (MCE: ABG)
  • E.ON (ETR: EOAN)
  • Siemens (NYSE: SI)
  • Sharp Corporation (TYO: 6753)
  • JA Solar (NASDAQ: JASO)
  • Yingli (NYSE: YGE)
  • Suntech Power (NYSE: STP)
  • First Solar (NASDAQ: FSLR)
  • GE (NYSE: GE)

Over the next few years, I’ll be providing you with more specifics on renewable energy development in Africa.

Make no mistake about it: This will prove to be a huge opportunity for us.

In the meantime, if you’re looking for a way to play Africa’s vast energy bounty today, take a look at some of the companies rushing to develop East Africa’s massive oil reserves.

This region actually boasts the richest concentrations of oil on the entire continent — yet until now, it has remained virtually untouched. But that’s all changing…

With roughly $7.3 trillion worth of oil at stake, East Africa is quickly becoming a hotbed of action for exploration companies.

One of the most promising has actually been featured by my colleague, Chris DeHaemer. You can read more about that here.

And of course, we’ll continue to update you on other new developments in Africa along the way. Rest assured, if there’s an opportunity to make a few bucks — we’ll be there!

To a new way of life, and a new generation of wealth…

Jeff Siegel Signature 

Jeff Siegel
Editor, Energy and Capital

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