Energy Markets Reforms and Renewable Energy in Africa: Do Public-Private Partnership Matter?

Original article by Kwamivi Mawuli Gomado and Amandine Laré

This article examines how electricity market reforms affect renewable energy production and consumption in Africa, emphasizing the moderating role of public–private partnerships (PPPs).

Nearly 600 million Africans lack electricity access, and although fossil fuels’ dominance has declined, growth in renewables is constrained by weak infrastructure, high costs—especially for decentralized solutions—and substantial financing risks.

Since the 1980s–1990s many developing countries have liberalized electricity markets—breaking up vertically integrated public monopolies and introducing competition and private participation.  However, evidence shows reforms alone rarely drive renewable expansion. Their effectiveness depends on governance and institutional mechanisms such as PPPs.

Focusing on renewable energy investments, the paper suggests that market liberalisation may create incentives that encourage short-term, high-return projects.  However, this potentially disadvantages renewable energy investments characterized by high upfront costs and long payback periods. 

It is also proposed that PPPs act as a key mediating mechanism between electricity market reforms and renewable energy development. By reducing perceived investment risks, improving project bankability, and mobilizing long-term finance, PPPs help mitigate the short-term bias induced by liberalization and align private incentives with public sustainability objectives.

Overall, this reasoning leads to an integrated causal mechanism: electricity market reforms reshape economic and institutional incentives; these changes influence the structure of energy investments; and the impact of reforms on renewable energy deployment depends on governance quality and the presence of institutional arrangements — such as PPPs — that reconcile economic efficiency with environmental sustainability.  In summary they argue that electricity market reforms are not an autonomous driver of the energy transition but rather an institutional shock whose effects depend on its interaction with governance and financing mechanisms.

This review of literature leads to two testable hypotheses: