Research

China's investments in renewable energy in Africa : Creating co-benefits or just cashing-in?

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Abstract

Investments in renewable energy are increasing rapidly in sub-Saharan Africa. The overall purpose of this paper is to explore to what extent and under what conditions these investments are producing economic co-benefits in terms of spillovers and linkage development effects. One peculiarity of Africa's renewable-energy sector is the rapid increase and likely future growth of Chinese involvement in large-scale renewable-energy infrastructure projects. Insights from other infrastructure, utility and resource-extraction sectors in sub-Saharan Africa suggest that China is pursuing a specific Chinese model of investments characterised by enclave characteristics and including finance, turnkey project development and the importation of labour and equipment from China. Hence our focus in this paper is to determine to what extent economic co-benefits are created when renewable-energy projects are developed by Chinese investors. To do this, we undertake an in-depth analysis of three Chinese renewable-energy investment projects in hydro, wind and solar PV, based on primary data. Overall, we find evidence of ‘bounded benefits’. On the one hand, we can identify some newly created jobs, linkages generated with actors in local systems of production and training activities involving local staff. On the other hand, the extent of these benefits is very limited. Overall, the results suggest that policymakers should be wary of overly optimistic expectations when it comes to assessing the co-benefits of renewable energy projects in the context of scarce pre-existing capabilities. However, the adoption of pro-active strategies and the implementation of carefully designed policies can increase the local economic co-benefits.