The signs of emergence are there: a growing base of operational projects, increasing engagement by institutional investors, and a gradual deepening of regional power strategies. Project finance remains the dominant mode of capital deployment, limited by nascent markets and structured around risk more than strategy. Institutional capital remains cautious not because it lacks appetite, but because the architecture it relies on remains unevenly distributed.

Without foundational reforms in funding architecture, including the creation of creditworthy pipelines, improved tariff bankability, and mechanisms for absorbing early-stage risk, the pool of M&A-eligible assets will remain shallow. Furthermore, capital deployment and capital reallocation are symbiotic, and without institutional funding pathways that can mature assets into scale, the secondary market is confined to isolated, opportunistic transactions.

To read Africa’s energy investment landscape correctly is to understand that it is not yet a market in the true sense. It is a terrain in assembly – one that demands design more than capital.

According to recent findings, global M&A  activity in the energy transition space reached $497 billion in 2024 – approximately 13.4% of the total $3.7 trillion in global M&A transactions across all sectors. In Africa, however, both the scale and structure of activity remain comparatively modest. While the number of recorded deals declined slightly – from 102 in 2023 to 94 in 2024 – the aggregate value more than doubled, from $5 billion to $12 billion.

The rise in transaction value, despite lower volume, suggests a selective escalation in asset maturity and pricing, likely driven by a small cohort of commercially proven projects entering the secondary market. Some analysts interpret this activity as a turn toward tactical consolidation, with companies pursuing smaller transactions to strengthen or rationalise portfolios. Yet in Africa’s case, the emerging profile of M&A appears less as a consolidation wave and more as a recalibration of capital – focused on isolated, de-risked opportunities rather than broader structural convergence.

This pattern is not incidental. The continent’s renewable energy landscape is not a singular market but a constellation of regulatory jurisdictions, each with its own permitting regime, tariff structure, procurement architecture, and currency exposure. Assets are often held in ring-fenced special purpose vehicles, designed to secure limited-recourse finance, but rarely optimised for aggregation or secondary trade. Projects vary widely in scale and bankability, and the underlying infrastructure – whether transmission capacity, dispatch capability, or grid access – is frequently bespoke and location-contingent.

Moreover, the nature of off-take arrangements – often denominated in local currency and subject to political renegotiation – further constrains the funding and tradability of operational assets. Even where sovereign guarantees exist, the mechanisms for enforcement, arbitration, and risk transfer remain uneven, limiting the extent to which assets can be priced and traded as financial instruments. These structural realities discourage strategic consolidation and favour one-off acquisitions calibrated to the specific risk appetite of the buyer.

To treat M&A as a strategic pathway in this context requires a reconfiguration of how assets are structured, how risk is shared, and how cross-border participation is facilitated. In short, it demands design. This includes the establishment of pooled asset vehicles, where operational projects can be warehoused under unified governance frameworks to facilitate recapitalisation, aggregation, or exit. It also entails the development of secondary financing instruments – refinance windows, securitisation frameworks, and blended finance platforms – capable of better absorbing de-risked projects and redistributing risk across longer tenors and deeper balance sheets.

Legal and regulatory harmonisation is equally indispensable. While full unification of energy codes across jurisdictions may remain distant, a baseline standard for asset classification, grid access rights, dispute resolution, and tariff adjustment mechanisms would materially lower the barriers to cross-border dealmaking. Without such harmonisation, every acquisition remains jurisdiction-bound, demanding bespoke structuring that erodes efficiency and limits replicability.

Regional power pools – such as the Southern African Power Pool (SAPP) and the West African Power Pool (WAPP) – may offer a partial institutional pathway here.

If operationalised with the necessary transmission and settlement infrastructure, these frameworks could provide the liquidity spine for cross-border wheeling and trade. Over time, they may also create a rationale for regionally consolidated platforms, allowing assets in multiple countries to be aggregated under a unified commercial and operational model.

In navigating this environment, some independent power producers and energy investment entities are beginning to orient themselves around two distinct institutional strategies. The first is the acquisition approach, where capitalised platforms pursue existing, often operational assets to accelerate scale and shorten time to cash flow. This strategy is opportunistic in character, shaped by the sporadic availability of mature projects and frequently driven by capital recycling dynamics among early-stage developers. It remains transactionally constrained, but tactically effective where assets have cleared key bankability thresholds.

The second is the diversified platform approach – a longer-horizon strategy aimed at constructing integrated, regionally scaled institutions with multi-technology portfolios and pan-jurisdictional presence. These entities are designed to operate as permanent actors within the procurement and infrastructure ecosystem – capable of internalising development capacity, institutionalising risk management, and positioning themselves as credible long-term counterparties to utilities, governments, and financial markets.

Neither strategy guarantees success, but both reflect a deeper institutional shift: a recognition that Africa’s energy transition will not be advanced solely through development.

For investment to become a strategic lever in Africa’s energy transition, it must be underwritten by coherence: in market design, in institutional posture, and in the instruments that connect assets to scale. The opportunity is not merely to attract capital, but to shape the conditions under which capital can move decisively, repeatably, and with system-level effect.

By Avania Moosa, Director: Resources & Energy