China's evolving role in Africa's energy transition: Overseas trade and investment in Kenya, Mozambique and South Africa

Kiryakova, Elena; Borodyna, Olena; Nadin, Rebecca; Howe, Lorraine; Cao, Yue Research Report China's evolving role in Africa's energy transition: Overseas trade and investment in Kenya, Mozambique and South Africa ODI Global Report Provided in Cooperation with: ODI Global, London Suggested Citation: Kiryakova, Elena; Borodyna, Olena; Nadin, Rebecca; Howe, Lorraine; Cao, Yue (2025) : China's evolving role in Africa's energy transition: Overseas trade and investment in Kenya, Mozambique and South Africa, ODI Global Report, ODI Global, London This Version is available at: https://hdl.handle.net/10419/319287 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/4.0/ Report China’s evolving role in Africa’s energy transition Overseas trade and investment in Kenya, Mozambique and South Africa Elena Kiryakova, Olena Borodyna and Rebecca Nadin with Lorraine Howe and Yue Cao April 2025 China’s evolving role in Africa’s energy transition Overseas trade and investment in Kenya, Mozambique and South Africa Elena Kiryakova, Olena Borodyna and Rebecca Nadin with Lorraine Howe and Yue Cao ODI Global 203 Blackfriars Road London SE1 8NJ United Kingdom © ODI Global 2025 This work is licensed under CC BY-NC-ND 4.0. Readers are encouraged to reproduce material for their own publications, as long as they are not being sold commercially. ODI requests due acknowledgement and a copy of the publication. For online use, we ask readers to link to the original resource on the ODI website. This material has been funded by UK government; however the views expressed do not necessarily reflect the UK government’s official policies. Views and opinions expressed in this publication are the responsibility of the author(s) and should in no way be attributed to the institutions to which they are affiliated or to ODI Global. How to cite: Kiryakova, E., Borodyna, O., Nadin, R. et al. (2025) China’s evolving role in Africa’s energy transition: overseas trade and investment in Kenya, Mozambique and South Africa. ODI Global report. London: ODI Global. Acknowledgements About this publication This report benefited from the in-country research support and valued inputs of several key informants in Kenya, Mozambique and South Africa, between February and March 2025. The authors are also grateful to Silvia Harvey (Senior Programme Manager at ODI Global) for project management support on this study. The findings, interpretations and conclusions expressed in the report are those of the authors. About the authors Elena Kiryakova is a Research Fellow in the Global Risks and Resilience Programme at ODI Global. Olena Borodyna is a Senior Geopolitical Risks Advisor in the Global Risks and Resilience Programme at ODI Global. Dr Rebecca Nadin is the Director of the Global Risks and Resilience Programme at ODI Global. Lorraine Howe is the Global Risks and Resilience Programme Business Development Advisor at ODI Global and Research Director at the Centre for Research on Governance and Development. Yue Cao is a Research Associate with the Global Risks and Resilience Programme at ODI Global. Contents Acknowledgements / IV Display items / VI Acronyms / VII Executive summary / 1 Key messages / 2 Lessons from the case studies / 2 Looking ahead / 4 What to watch / 4 1 Introduction / 5 1.1 Domestic drivers of China’s overseas investment in energy and green value chains / 9 1.2 Global overview of China’s overseas energy sector engagement / 14 2 China’s energy projects and clean energy technology trade in Kenya / 22 2.1 Overview of Kenya’s energy sector and green industrialisation ambition / 22 2.2 Trade in clean energy technology / 26 2.3 Energy-related investment and lending / 27 2.4 Impact assessment: how is China contributing to Kenya’s energy transition? / 32 3 China’s energy projects and clean energy technology trade in Mozambique / 35 3.1 Overview of energy sector and green industrialisation ambition / 35 3.2 Trade in clean energy technology / 40 3.3 Energy-related investment and lending / 41 3.4 Impact assessment: how is China contributing to Mozambique’s energy transition? / 44 4 China’s energy projects and clean energy technology trade in South Africa / 48 4.1 Overview of energy sector and green industrialisation ambition / 48 4.2 Trade in clean energy technology / 52 4.3 Energy-related investment and lending / 53 4.4 Impact assessment: how is China contributing to South Africa’s energy transition? / 56 5 Looking forward / 58 References / 61 Appendix 1 Methodology / 69 Display items Boxes Box 1 Scope and approach / 7 Tables Table 1 Summary indicators for case study countries / 9 Figures Figure 1 Electricity production in China by source, 2010–2022 / 10 Figure 2 Annual Chinese overseas energy lending to Africa and the rest of the world, 2010– 2021 / 15 Figure 3 Cumulative Chinese overseas energy lending, 2010–2021 / 16 Figure 4 Composition of China’s global energy lending by creditor type, 2010–2021 / 17 Figure 5 Number of Chinese global energy sector investments and engineering contracts, 2010– 2024 / 20 Figure 6 China’s annual exports of clean energy products by trade value and destination, 2017– 2024 / 21 Figure 7 Electricity production in Kenya by source, 2010–2023 / 23 Figure 8 China’s annual exports of clean energy products to Kenya by trade value, 2017–2024 / 27 Figure 9 Chinese energy-related loans to Kenya by sub-sector, 2010–2021 / 28 Figure 10 Kenya’s FDI stock by country of origin, 2022 / 29 Figure 11 Number of Chinese energy-related projects in Kenya, 2010–2024 / 30 Figure 12 Composition of Chinese energy investments in Kenya by project value, 2010–2024 / 31 Figure 13 Electricity production in Mozambique by source, 2010–2022 / 36 Figure 14 China’s annual exports of clean energy products to Mozambique by trade value, 2017– 2024 / 41 Figure 15 Number of Chinese energy-related projects in Mozambique, 2010–2024 / 43 Figure 16 Electricity production in South Africa by source, 2010–2022 / 49 Figure 17 China’s annual exports of clean energy products to South Africa by trade value, 2017– 2024 / 53 Acronyms AfDB African Development Bank BRI Belt and Road Initiative CDB China Development Bank DFC United States International Development Finance Corporation EDM Electricidade de Moçambique EMDE emerging market and developing economy EPC engineering, procurement and construction EV electric vehicle FDI Foreign Direct Investment FOCAC Forum on China-Africa Cooperation FUNAE Fundo de Energia FYP five-year plan GDP gross domestic product GHG greenhouse gas HCB Cahora Bassa Hydroelectric Plant IEA International Energy Agency ICBC Industrial and Commercial Bank of China ICE internal combustion engine IMF International Monetary Fund IPG International Partners Group IPPs independent power producers JETP Just Energy Transition Partnership KPLC Kenya Power and Lighting Company LNG liquefied natural gas M&As mergers and acquisitions MDB multilateral development bank NDC Nationally Determined Contribution NEVs new energy vehicles OEM original equipment manufacturer PPP public-private partnership PRC People’s Republic of China PV photovoltaic RE renewable energy SADC Southern African Development Community SAPP Southern Africa Power Pool SOEs state-owned enterprises SPV Special Purpose Vehicle VAT Value Added Tax WITS World Integrated Trade Solution 7 generally targeted the sub-sectors aligned with the national energy priorities of each country. The report is structured as follows. In Section 1.1 we outline the domestic drivers of China’s overseas energy-related activity. This sets the scene for Section 1.2 which presents the distinct characteristics of China’s energy-related lending practices, equity investments and construction activities, as well as its export flows for clean energy technology components. 4 Given the sensitive nature of issues probed in this study, interviewees requested anonymity in sharing their views. The analysis therefore does not identify individual interviewees but includes references to ideas shared through stakeholder consultations where relevant. 5 Official sector lending covers bilateral lending only and excludes China’s multilateral lending, such as through the New Development Bank or African Development Bank. Sections 2, 3 and 4, which are the focus of this paper, present the country case studies for Kenya, Mozambique and South Africa, respectively. In each case study, we analyse how bilateral trade, investment and lending from China contributes to the national energy transition goals, the implications of these on the energy and other sectors of the economy, and the gaps. In Section 5 we discuss how China’s offer to EMDEs is likely to evolve, and the implications of unfolding geopolitical realignments for the energy transition needs in Africa. Box 1 Scope and approach The study draws on descriptive quantitative analysis, policy review and stakeholder consultations with national and international experts in each country.4 What do we mean by overseas economic engagement? We use ‘overseas economic engagement’ as an umbrella term that captures China’s foreign investments, bilateral lending and exports.5 When looking at energy equity investment and lending, we focus on financial flows into power generation plants, transmission and distribution projects and local manufacturing for clean energy technology components. Investment includes greenfield investments and mergers and acquisitions (M&A). The trade analysis focuses on China’s exports of four clean energy technology products: assembled solar panels, wind turbines, lithium-ion batteries and fully electric motor vehicles. 8 For the lending analysis, we use AidData’s Global Chinese Development Finance dataset (V3.0) which documents bilateral loan commitments from China’s official sector institutions through 2021. Note that we cannot address more recent lending trends due to this limitation. Foreign investment and construction contracts data primarily comes from the Janes IntelTrak database of Chinese overseas investments, while our trade information is compiled from multiple sources (which are specified in each instance). For investments, construction activities and trade, our analysis covers trends through 2024.6 What do we mean by energy transitions? Energy transition is the structural shift from an energy mix based on fossil fuels such as coal, oil and natural gas, to one based on renewable energy sources: modern bioenergy, geothermal, solar, wind, hydropower, marine energy (IRENA, 2024b). We follow the IEA and use ‘clean energy’ as a broader umbrella term that groups energy sources, infrastructure, applications and assets compatible with a net zero emissions energy system (IEA, n.d.). This includes battery storage and electricity grids, and enduse applications such as hydrogen fuels and EVs. In each case study, we use the frame of the national energy and industrial strategy and broader socio-economic development goals to assess China’s contribution to meeting the financing and technology needs of the domestic energy transition. In the case of Mozambique, natural gas exploration is part of the economic development agenda. Natural gas, which emits less carbon than most other fossil fuels, is commonly considered a ‘transition fuel’ away from coal, or a back-up for variable wind and solar power (Gürsan and De Gooyert, 2021). While increasing natural gas production is not compatible with the IEA’s net zero pathway, we acknowledge China’s activity within these expectations on the role of gas in Mozambique’s development. Given the limited timeframe and scope of this analysis, the report provides an initial exploration of Chinese actors’ evolving role in supporting clean energy transitions abroad. Further studies with more extensive fieldwork and broader geographic reach could build on these insights. We discuss some suggestions for future analysis in Section 5. 6 See Appendix 1 for details on the data sources and methodology. 9 Table 1 Summary indicators for case study countries Country GDP per capita (current US$), 2023 Chinese FDI stock (current US$ billion), 2022 External debt to China as % of GDP, 2023 Import share from China (% of all imports), 2023 Export share to China (% of all exports), 2023 Regulatory Indicators for Sustainable Energy (RISE) Kenya 1,952 1.78 5.56 17.61 2.89 61 Mozambique 623 1.18 7.95 15.38 14.30 39 South Africa 6,022 5.74 0.93 20.46 11.29 47 Note: RISE is a combined index of electricity access, access to clean cooking, energy efficiency and renewable energy that is designed to compare national policy and regulatory frameworks for sustainable energy. RISE classifies strong performers as having a score of 67-100, midperformers with 34-66 and weak performers with 0-33. Source: authors’ elaborations based on World Bank Development Indicators, World Bank International Debt Statistics, WITS, Regulatory Indices for Sustainable Energy, China’s Ministry of Commerce 1.1 Domestic drivers of China’s overseas investment in energy and green value chains Overseas energy sources gained in prominence in China’s foreign policy in the 1990s (Nadin, 2007). In 1993 the then Premier of the PRC, Li Peng, announced that a primary policy goal was ‘to secure a long-term and stable supply of oil to China’ (Nadin, 2007). In a bid to increase production and reserve volumes, establish overseas bases and diversify suppliers, China’s energy policy focused heavily on overseas expansion and investment in oil-producing countries such as Russia, Kazakhstan, Iran, Iraq and Sudan (Nadin, 2007). Its 10th FYP (2001–2005), emphasised the importance of ‘energy security’ as a foreign policy objective. The objective for exploration was to ‘ensure a long-term reliable and sustainable oil supply at a reasonable price in order to achieve the national goal of sustainable and sound economic growth’. With the expansion of its overseas energy portfolio, China had to focus on ensuring political and physical security along supply routes in exporting and transit states (Nadin, 2007). How China now defines the sources of its energy security has evolved, but its primacy as a national security goal has not diminished. This is partly due to the fact that China’s economic expansion over the past two decades has fuelled energy consumption, with power consumption going up by 560% (IEA, 2024a). As of 2022, fossil fuels, primarily coal, comprised the majority of the energy mix, including in power production (IEA, 2024a). The share of modern renewables, such as solar PV and wind, reached 5% and 9% of the total electricity respectively in the same year (ibid). From 2010 to 2022, 10 China saw solar PV electricity production grow from 699 GWh to 427,000 GWh, while wind power generation increased from 45,000 GWh 763,000 GWh 7 Article 21 of the National Security Law, 2015. 8 (1) Promote the energy consumption revolution and suppress unreasonable energy consumption. (2) Promote the energy supply revolution and establish a diversified supply system. (3) Promote the energy technology revolution and drive industrial upgrading. (4) Promote the energy system revolution and open up the fast lane of energy development. (5) Strengthen international cooperation in an all-round way to achieve energy security under open conditions. respectively (ibid). The share of electricity generated from natural gas and nuclear power has also increased (ibid). Figure 1 Electricity production in China by source, 2010–2022 Source: authors’ elaborations based on (IEA, 2024a) Despite growing diversification of the power mix, energy security remains a national security priority for the Chinese government.7 The shift to actively promoting wind and solar sectors can be traced to the mid-2000s with the adoption of the Renewable Energy Law in 2005 and the Mid-to-Long-Term Renewable Energy Development Plan in 2007 (Hove, 2024). The 2020 White Paper on China’s Energy Development in the New Era outlines priorities for the energy sector, including a diversified supply system, promotion of the energy technology revolution and strengthening international cooperation to achieve energy security (The Information Office of the State Council, 2020).8 According to the White Paper, the aim is to sustain investment in coal and gas exploration, as well as promote green and efficient coal mining practices (ibid). Since 2019, China’s crude petroleum imports from Africa have increasingly been replaced by imports 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 GWh Coal Natural gas Hydro Biofuels Wind Nuclear Solar PV Other 11 from Russia, the Gulf Cooperation Council countries and other Asian economies (Usman and Xiaoyang, 2024).9 It was the 14th Five-Year Plan (FYP) for Renewable Energy (2021–2025) that accelerated China’s aims to further drive the adoption of renewable energy (RE). Targets include increasing RE capacity by 50%, raising its share to 33% of overall power mix, and the share of non-hydro renewables to 18% (National Development and Reform Commission et al., 2021). Thus, initially geared towards export markets, solar production received strong government support at various levels, including targeted assistance through low-cost loans (Hove, 2024). Hove (2024) identifies four broad factors that have enabled China to promote clean energy production: policy support, technology transfer as a policy and corporate strategy, manufacturing scaleup through integrated industrial clusters, and the development of human capital. In 2023, nine of the top ten global solar PV manufacturers were Chinese companies (Wood Mackenzie, 2024b). The country also accounted for four of the five leading wind turbine original equipment manufacturers (OEMs), with GoldWind alone installing 16.3 GW that year. However, rising competition and intense price cutting are weighing on profitability in the sector (Wood Mackenzie, 2024a). The earlier state-led ‘Made in China 2025’ policy already highlighted new energy vehicles (NEVs), fuel cell vehicles 9 According to WITS data, in 2023, 87% of China’s $103 billion worth of imports from Africa were concentrated in four commodity categories – mineral fuels, ores, precious metals and copper. and electric power equipment, including for RE technologies and advanced energy storage, as key strategic industries for internal and external promotion (State Council of the People’s Republic of China, 2015). However, during the 14th FYP period, the role of strategic emerging industries, including new energy, new materials, high-end equipment, and NEVs, is expected to grow, with their contribution to value addition targeted to exceed 17% of GDP (National Development and Reform Commission, 2022b). 1.1.1 Evolution of renewable energy and low-carbon value chains in China’s foreign and outward investment policy As the country’s economy and industry developed, the role of the energy sector in its foreign and outward investment policy expanded from an initial focus on securing oil reserves to fuel growth, to incorporating renewable energy projects and exports of products along the low-carbon value chain. A number of policy frameworks were established during the 13th Five Year Plan (2016-2020) to encourage Chinese enterprises to trade and participate in RE and low-carbon value chains projects and products. This included the Guiding Opinions of the CPC Central Committee and the State Council on Promoting High-Quality Development of Trade, which emphasised expanding markets and trade in highquality, high-tech and high-value-added products, including through the BRI and 12 in emerging industries, as well as green design and manufacturing (MOFCOM, 2019). Similarly, the Guiding Opinions on Strengthening International Cooperation to Improve the Status of China’s Industrial Global Value Chain encouraged Chinese enterprises to participate in construction contracts and to export Chinese equipment, technology, standards and services, including in the power equipment sector (MOFCOM, 2016). China’s 14th FYP for RE prominently featured the country’s role in promoting a low-carbon energy transition and strengthening international trade in renewable energy solutions. This includes cooperation in planning guidance, policy design, technical exchanges, financing and high-level political engagement through mechanisms like the BRI Energy Ministerial Meeting (National Development and Reform Commission et al., 2021). The 14th FYP for RE placed particular emphasis on encouraging high-quality RE industries to ‘go out’ and integrate into global value chains in equipment, technology, standards and branding (ibid.). The country’s medium-term plans for NEVs and hydrogen industries also include a strong outward investment and trade angle. Chinese NEV producers, for instance, are encouraged to enhance their global competitiveness, develop international markets and 10 For example, the BRI Vehicles Low-Carbon Standards Research and Demonstration Project, under the BRI International Green Development Coalition, promotes China’s active participation in shaping standards for emerging industries. promote industrial cooperation along the entire value chain (General Office of the State Council, 2020). Consistent with China’s broader approach to shaping standards along BRI in other sectors, such as digital infrastructure, similar initiatives have emerged in green infrastructure and transportation.10 1.1.2 BRI and the Forum on China-Africa Cooperation The energy sector is one of the priority cooperation areas under China’s flagship BRI announced in 2013, which aims to promote connectivity across the Asian, European, and African continents (Nadin et al., 2023). Flagship economic corridors like the China-Pakistan Economic Corridor (CPEC) are intended to secure the passage of China’s oil and petroleum imports from the Middle East by avoiding existing routes and choke points through the Straits of Malacca between Malaysia and Indonesia (Nadin et al., 2023). CPEC projects also provided an opportunity to address power shortages and infrastructure deficits in countries like Pakistan. Energy generation and transmission projects have played a prominent role in this regard, with coal accounting for most of the additional generation capacity that exceeds 8,000 MW across 14 completed projects. However, renewable energy sources such as wind, solar, and hydro also featured in the project mix (Nadin et al., 2023). Some of China’s financing and construction 13 activities in the energy sector in Asian and African countries pre-date the BRI (Borodyna et al., 2022).11 China affirmed its commitment to RE in Africa and the development of low-carbon value chains, pledging to implement 30 clean energy and green development projects and establishing a Special Fund for Green Industrial Chains under the FOCAC action plan. Across the continent, renewable energy presents an opportunity to bridge power access gaps. There is also an increasing focus on value addition in mineral supply chains. For instance, the African Union’s African Commodities Strategy aims to expand local processing (African Union, 2021). Green industrialisation is also gaining momentum, reflected in Kenyan President William Ruto’s launch of the pan-African Green Industrialisation Initiative at COP28. At the most recent FOCAC Summit in 2024, China committed to strengthening industrial cooperation by supporting local value chains, expanding manufacturing and processing of critical minerals, and driving growth across five regions with 10 projects to support industrial parks. President Xi Jinping reaffirmed that ‘China is ready to help Africa build ‘green growth engines’, narrow the gap in energy accessibility … and jointly push for the global transition to green and low-carbon development’; pledging to 11 For instance, in Kyrgyzstan, China provided financing for the modernisation of electricity transmission lines through the Export-Import Bank of China (EXIM Bank), with construction carried out by TBEA, dating back to 2011 (Borodyna et al., 2022). A year later, China also financed the construction of the 500 kV Datka-Kemin electricity transmission line and the 500 kV Datka substation, which were also constructed by TBEA. These projects aimed to improve energy connectivity and enhance the region’s power infrastructure. launch 30 clean energy projects over the next three years and encourage two-way investment for new business operations by Chinese and African companies and create 1 million jobs on the continent (MFA of the PRC, 2024a). 1.1.3 Commercial drivers of outward investment China’s overseas financing and construction of clean energy projects is driven by several interconnected domestic economic factors. One major driver is the need to invest its large reserves of savings and address industrial overcapacity. The Chinese government’s response to the 2008 financial crisis led to the over-expansion of the construction and heavy manufacturing sectors. This created industrial overcapacity in the production of materials such as steel, as well as surplus investment capital and skilled labour that were not yielding high enough returns domestically (Nadin et al., 2023). China’s overseas economic engagement, such as through the BRI, serves to redeploy excess resources abroad, mitigate these domestic inefficiencies and generate new demand for its exports. Second, China’s economic strategy targets leadership in high-end manufacturing, including supply chains for clean energy. Through targeted 14 government support and demand-side policies – such as subsidies, tax credits and feed-in tariffs, China has become a leader in several clean energy technology supply chains, controlling over 80% of solar panel manufacturing and 60% of wind turbine component production (IEA, 2022, 2023a). By 2028, China is projected to account for nearly 60% of global new renewable energy capacity (IEA, 2023c). By financing, constructing and supplying equipment for overseas renewable energy projects, China creates (i) export markets for its domestically prioritised industries – such as NEVs and batteries, and (ii) opportunities for its contractors to move up global value chains, competing in higher-value markets for design and consulting – sectors historically dominated by European firms (Tanjangco et al., 2021). State industrial policy and domestic competition have also allowed Chinese companies to reduce domestic costs for key technologies, such as solar PV, and out-compete other markets (Zhu et al., 2019). The scale of China’s clean energy technology sector growth has also reduced prices for key equipment worldwide and narrowed the cost barrier to green energy transitions in the Global South (IEA, 2023a). This creates a feedback loop for Chinese exports as developing and emerging economies interested in developing renewables will almost certainly source components from China. 1.2 Global overview of China’s overseas energy sector engagement Having explored China’s motivations for overseas energy sector engagement, we now turn to how this engagement manifests in practice. This section presents the distinct characteristics of China’s lending practices, equity investments and construction activities in energy sectors, as well as its trade flows for clean energy technology components. For policymakers, understanding these patterns serves two main purposes. First, it highlights the complexities of mobilising finance for energy transitions in EMDEs. While Chinese capital and expertise have been significant contributors in these markets, the constraints China faces are not unique, and similar challenges are encountered by other foreign investors in these regions. Second, it provides context for crafting effective international partnerships and risk mitigation strategies that account for the evolving capabilities and risk preferences of Chinese actors. As China controls manufacturing and trade for most clean energy technologies, the resulting geographic concentration leaves the entire supply chain vulnerable to disruptions from policy shifts, corporate decisions, technical failures or natural disasters (IEA, 2023a). 15 1.2.1 Lending China’s official annual overseas energy sector lending peaked in 2016 and has steadily decreased since (Figure 2). The scale of this financing was substantial, with total energy lending reaching $225 billion between 2010 and 2021.12 The China Export and Credit Insurance Corporation (Sinosure) underwrote just over a third 12 Unlike other sectors where the relative share of renminbi-denominated loans has increased, Chinese energy lending remained predominantly dollar-denominated: 94% of Chinese energy sector loans were dollar-denominated (2010–2021). of all energy loans, and over half of commercial bank loans. This funding was also highly concentrated, with 60% directed to just ten recipient countries: Pakistan, Angola, Brazil, Viet Nam, Indonesia, Laos, Bangladesh, South Africa, Argentina and Venezuela (see Figure 3). African economies received nearly a third ($65 billion) of energy-related financing during this period. Figure 2 Annual Chinese overseas energy lending to Africa and the rest of the world, 2010– 2021 Source: Authors’ elaborations based on AidData (2023) 0 10 20 30 40 50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 $ billions (2021 constant USD) Africa Other regions 16 Figure 3 Cumulative Chinese overseas energy lending, 2010–2021 Source: Authors’ elaborations based on AidData (2023) 13 A preferential (export) buyer’s credit (PBC) is a USDor EUR-denominated loan that China Eximbank issues to government institutions to facilitate their acquisition of goods and services from a Chinese supplier. The borrowing terms of these loans vary, but they tend to be offered at fixed interest rates that are typically more generous than prevailing market (floating) rates. China Eximbank’s policy is to allow borrowers to use PBC proceeds to finance up to 85% of the cost of a commercial contract with a Chinese supplier, while counterpart funding is required to cover the remainder. Debt financing from state-owned policy banks has been the dominant model for Chinese energy sector lending, but this is changing. The Export-Import Bank of China (China Eximbank) and the China Development Bank (CDB) provided over two-thirds of cumulative external energy lending over this period. However, lending from the policy banks has been on the decline in both absolute values and as a share of China’s total energy lending since 2017 (Figure 4). In 2021, loans from commercial lenders, such as the Industrial and Commercial Bank of China (ICBC) and Bank of China, stood at $2 billion and represented 71% of all energy lending, compared to $760 million from policy banks. This suggests that while Chinese companies continue to develop energy projects overseas (see 1.2.2), the funding no longer comes primarily from traditional policy bank lenders as financing approaches are shifting towards commercial lending and project finance. Additionally, the use of preferential (export) buyer’s credits – which offer more favourable terms than market rates – has declined since peaking in 2015, indicating a reduced role of concessional finance for overseas energy projects.13 Lending volume (2021 constant $ billions) 027 23 Rural Electrification and Renewable Energy Corporation (REREC) (Ministry of Energy and Petroleum, 2025). REREC was established to provide subsidised electricity in rural areas with an expanded mandate to promote green energy adoption (REREC, n.d.). Among gridconnected electricity customers, the uptake of electric cooking appliances remains low, at just 3% in 2023 (Ministry of Energy and Petroleum, 2025). With a baseload powered by geothermal energy, supplemented by wind and solar, Kenya’s power mix is already dominated by renewable energy. In 2023, approximately 90% of electricity generation came from RE sources: geothermal (47%), hydropower (21%), wind (16%), solar (4%) and biofuels (2%) (Figure 7). There has been a significant improvement in phasing out thermal generation in the electricity mix since 2010. However, the country’s overall energy mix remains dominated by biofuels (61%), followed by renewable energy (18%), as well as oil (17%) and coal (3%) (IEA, 2024b). Limited access to clean cooking drives the reliance on biofuels, while fossil fuels are widely used in industrial processes and transport. Figure 7 Electricity production in Kenya by source, 2010–2023 Source: authors’ elaborations based on IEA (2024b) The power sector accounts for only 9% Kenya’s overall energy demand and requires scaling up to meet growing demand (Ministry of Energy and Petroleum, 2025). Its overall effective installed electricity capacity increased from 2,736 MW in 2019 to 3,112 MW (Kenya National Bureau of Statistics, 2024). With the number of KPLC customers growing by over 3 million between mid-2018 and early 2025 to reach 10 million, the country’s peak demand has also increased to reach 2,304 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 GWh Oil Hydro Biofuels Wind Solar PV Geothermal 24 MW (Ministry of Energy and Petroleum, 2025). Electrification of cooking and shift to EVs are among the factors that will generate additional grid demand (Ministry of Energy and Petroleum, 2025). Kenya’s power demand varies throughout the day and week, with peaks in the evenings and on weekends.25 After the evening peaks, the country often implements curtailment, with excess baseload, generated primarily from geothermal power, venting steam (Ministry of Energy and Petroleum, 2025). Kenya’s transmission grid includes a range of high-voltage transmission lines and is connected to Ethiopia, Uganda and Tanzania. Under the Transmission Master Plan 2024–2043, its grid will expand by approximately 2,500 km by 2027 and around 9,000 km by 2041 (Ministry of Energy and Petroleum, 2025). In 2024, Kenya’s electricity imports from Ethiopia and Uganda rose to meet peak demand (Nzomo, 2024). Recent upgrades to transmission lines between Kenya and Tanzania have enhanced connectivity between the two countries (KETRACO, 2024). This is particularly significant as both nations are members of the Eastern Africa Power Pool, where crossborder transmission and trade are set to commence in March 2025 (ibid.). As of 2021, Kenya accounted for just 0.1% of global greenhouse gas (GHG) emissions, but the country is highly vulnerable to climate risks (IEA, 2024b; World Bank, 2023a). Emissions from the energy sector have risen by 116% over the past two decades, with transport 25 Source: stakeholder consultation with energy sector experts. contributing the largest share of emissions (62%), followed by industry (18%), electricity and heat (7%), and residential sectors (6%) (IEA, 2024b). Kenya’s Nationally Determined Contribution (NDC) commits the country to a 32% reduction in emissions compared to the businessas-usual scenario by 2030, conditional on financing, with adaptation as a key priority (Ministry of Environment and Forestry, 2020). The country ranks 145th on the NDGAIN Index, underscoring its vulnerability to climate risks (University of Notre Dame, 2025). Climate-related hazards like droughts and floods affect both the economy and households through multiple channels (World Bank, 2023a). 2.1.2 Overview of energy and green industrialisation policy Energy access is a crucial pillar of Kenya’s Vision 2030, the country’s blueprint for long-term economic development. The plan aims to transform Kenya into ‘a newly industrialising, middle-income country providing a high quality life to all citizens’ in a ‘clean and secure environment’ (Government of the Republic of Kenya, 2007). The government is targeting universal energy access and 100% renewable electricity by 2030 through a series of strategies (Ministry of Energy and Petroleum, 2024). Kenya aims to develop a diverse energy mix to support its growing economy and expand electrification across key sectors such as clean cooking, industry and transport. The country’s draft Energy 25 Plan for 2025–2034 outlines six strategic objectives, including reaffirming Kenya’s commitment to achieving universal electricity access by 2030, prioritising renewable energy in diversifying the energy mix for cooking, and supporting innovation through emerging technologies and financing mechanisms (Ministry of Energy and Petroleum, 2025). When it comes to modern renewables, Kenya plans to scale-up geothermal, solar and wind power. With installed geothermal capacity already reaching 940 MW, the government plans to invest in its further development, including the creation of the National Geothermal Development Strategy. With an installed capacity of 435 MW of wind and 212.5 MW of solar, Kenya plans to scale up these technologies while investing in grid stability to manage their intermittency. Among other clean energy sources, hydropower is a priority. The country currently has an installed hydro capacity of around 840 MW, much of which is aging. With approximately 6,000 MW of hydro potential, including small hydro, it aims to harness these resources while managing their environmental and social impacts (Ministry of Energy and Petroleum, 2025). Kenya has a long-term goal of developing nuclear power, viewing it as a potential source of baseload electricity. Construction of its first nuclear power plant is expected by 2027, with electricity generation set to begin by 2034 (Payton, 2024). In 2019, Kenya’s Nuclear Power and Energy Agency signed a contract with China National Nuclear Corporation to determine the most suitable location for this (Janes, 2024). Other sources such as thermal power generation will continue to be part of the power mix to help meet peak power demand. The country is looking to localise low-carbon value chains and reduce reliance on imported renewable energy technologies. The draft energy policy emphasises the need to not only establish effective support mechanisms for solar, wind, and geothermal expansion but increase the role of local content (Ministry of Energy and Petroleum, 2025). To this end, Kenya aims to promote local manufacturing hubs. Other opportunities for localising value chains include clean cooking equipment, R&D capacity, as well as strengthening the critical minerals value chain. In the first five years of the strategy, quotas for locally manufactured energy components will be developed (Ministry of Energy and Petroleum, 2025). Kenya aims to capitalise on its abundant renewable energy resources to scale up green hydrogen production and published its first Hydrogen Strategy in 2023 (Ministry of Energy and Petroleum, 2023). With potential applications across various sectors, including industry, transport, power and agriculture, the government plans to adopt a phased approach to developing the industry over ten years. The use of hydrogen for nitrogen fertiliser and methanol production in agriculture is of particular interest, given the sector’s significant role in employment and contribution to GDP, and the country’s 26 reliance on imported fertilisers, which impacts its balance of payments (Ministry of Energy and Petroleum, 2023). Overall, the strategy has four objectives: (1) improve balance of payments, (2) enhance food security and resilience, (3) promote green industrialisation and decarbonisation and (4) attract investment (Ministry of Energy and Petroleum, 2023). Several projects have already been announced. For instance, Fortescue plans to develop a 300 MW capacity green ammonia and fertiliser facility utilising geothermal resources in Naivasha (Green Hydrogen Organisation, n.d.). 2.2 Trade in clean energy technology China is Kenya’s largest import trading partner, with Kenya a net importer from China. The relationship is characterised by a substantial trade deficit for Kenya – this reached $3.07 billion in 2023. Kenya primarily imports manufactured goods, machinery (including machinery predominantly used in the construction sector) and electrical equipment from China, while it exports mineral ores (chiefly titanium, zirconium and manganese) and agricultural products.26 This pattern reinforces China’s role as a supplier of value-added goods while positioning Kenya primarily as a provider of raw materials. Kenya relies on imports to scale its renewable energy capacity and the existing general regulatory framework incentivises the uptake of clean energy. For example, certain items such 26 Data as of 2023 from Observatory of Economic Complexity, based on UN Comtrade. as windmills are not subject to import duties, and with the Finance Act 2021 the government reintroduced VAT exemptions for specialised solar and wind energy generation equipment, including PV modules, current inverters and deep cycle batteries that use or store solar power (IEA, 2016b; PwC Kenya, 2021). These measures demonstrate a commitment to reduce barriers for renewable energy technology adoption despite the reliance on imports. China dominates Kenya’s clean energy technology import market. In 2024, Chinese exports to Kenya included $45.9 million worth of assembled solar panels, $39.3 million worth of lithium-ion batteries and $2.3 million worth of electric motor vehicles (Figure 8). According to World Integrated Trade Solution (WITS) data, China is the largest single source of imports for all three clean energy technology products – in 2023, 96% of Kenya’s PV panels, 81% of lithium-ion batteries and 21% of electric vehicles came from China. China surpassed Japan as the leading importer of EVs in 2023. Other significant EV exporters to Kenya in the same year were South Korea (18%), Japan (16%) and the United Kingdom (15%), illustrating a more diversified supplier base in this sector. 27 Figure 8 China’s annual exports of clean energy products to Kenya by trade value, 2017–2024 Source: authors’ elaborations using Observatory of Economic Complexity and Ember based on General Administration of Customs of the People’s Republic of China27 27 The product mapping follows the Harmonised System (HS) by the World Customs Organisation. The HS product codes used are 850231 (wind turbines); 85414020 and 85414300 (solar panels); 850760 (lithium-ion batteries); 870380 (fully electric motor vehicles). 2.3 Energy-related investment and lending 2.3.1 Lending China’s energy-related lending to Kenya has been dominated by bilateral policy-bank debt financing for large transmission infrastructure projects. According to AidData, between 2010 and 2021, Kenya received $2.35 billion through 16 project-based loans (Figure 9). Eximbank provided over 80% of these loans, and Chinese SOEs and private companies were involved in the implementation of all of the loans, either as the standalone implementing agency or in a joint venture with Kenyan government agencies or SOEs. Lending from Eximbank has been concessional, with 2–3% interest rates where the borrowing terms are disclosed. China’s energy-related loans peaked in 2017 with no new lending since. $ millions $ millions$ millions $ millions Solar panels Wind turbines Lithium-ion batteries Electric vehicles (EVs) 0 10 20 30 40 50 60 70 80 2017 2018 2019 2020 2021 2022 2023 2024 0 1 2 3 4 5 6 7 8 2017 2018 2019 2020 2021 2022 2023 2024 0 5 10 15 20 25 30 35 40 45 2017 2018 2019 2020 2021 2022 2023 2024 0 0.5 1 1.5 2 2.5 2017 2018 2019 2020 2021 2022 2023 2024 28 Figure 9 Chinese energy-related loans to Kenya by sub-sector, 2010–2021 Source: authors’ elaborations based on AidData (2023) 28 Exchange rate used for conversion: 1 KES = 0.0088104 USD (31 December 2022). Source: Wise Currency Converter. The Government of Kenya was the direct recipient of the majority of these loans – 13 were made directly to the government, and one specifically targeted the National Treasury. The National Treasury loan was underwritten by the China Export & Credit Insurance Corporation (Sinosure). The two loans not directed towards the government – received by Triumph Power Generating Company (a Kenyan SPV) and China International Water and Electrical Corporation (a Chinese SOE), received third-party insurance from the Multilateral Investment Guarantee Agency and a sovereign guarantee, respectively. This pattern of direct lending to government is observed across China’s lending in other sectors. 2.3.2 Equity investment and construction activity China’s total FDI in Kenya is growing. In 2022, the leading foreign investors by FDI stock were the United Kingdom (21.9% of total FDI), Mauritius (11.8%), the Netherlands (11.5%), South Africa (11.5%) and India (8.3%). China’s FDI stock in that year stood at 23.3 billion Kenyan shillings ($189 million) – less than 2% of Kenya’s total FDI stock (Kenya National Bureau of Statistics, 2023).28 However, this represented an increase of 66% from 2020 levels, which was significantly faster than the FDI stock growth of other major investors. 0 1 2 3 4 5 6 7 8 0 0.2 0.4 0.6 0.8 1 1.2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Number of loans $ billions (2021 constant USD) Geothermal Solar Transmission & distribution Other Total loans 29 Figure 10 Kenya’s FDI stock by country of origin, 2022 Source: authors’ elaborations based on Kenya National Bureau of Statistics’ 2023 Foreign Investment Survey Report China is now an important investment partner in Kenya’s energy infrastructure. In recent years, it has financed and constructed several key renewable energy projects, such as: • Funding and technical support for the Olkaria IV Geothermal Field Project. In 2010 China Eximbank and the Government of Kenya signed a $93 million concessional loan agreement for the development of a 140 MW geothermal power plant in Naivasha, Nakuru County. China’s Great Wall Drilling Company implemented the project in collaboration with KenGen, Kenya’s Ministry of Energy and Petroleum, and Kenya’s special purpose vehicle for geothermal development, the Geothermal Development Company. • Funding, design and construction of the Garissa Solar Park. The 50 MW solar power farm located in Garissa, one of the largest solar PV stations in Africa, was designed and built by China Jiangxi Corporation for International Economic and Technical Co-operation, in collaboration with Kenya’s Rural Energy Authority and Chinese solar company JinkoSolar Holding, which supplied the PV modules. The project was funded by a $135 million concessional loan from China Eximbank and has been operational since 2019. The Rural Electrification Authority and China Jiangxi reported that 600 local people were employed in the construction phase, while 50 Kenyan technicians received training during installation (China Daily, 2019). 0% 10% -10% 20% 30% 40% 50% 60% 70% 0 50 100 150 200 250 300 350 UK Netherlands Mauritius India South Africa China US Percent change KSh billion FDI stock (2022) Percentage change (2020-2022) 30 • Funding and construction of the Orpower 22 Geothermal Power Plant. In November 2024, Kaishan Group announced a $93 million investment in the 35 MW geothermal power plant near Nakuru, which is being constructed by PowerChina. The plant is part of the Menengai Geothermal Power Project, which consists of three geothermal power plants built and operated by IPPs. Kaishan Group, which in 2023 acquired a 100% stake in Orpower 22, a Kenyan independent power producer, supplied the equipment. President Ruto stated that the completion of the project will elevate 29 This estimate likely represents a lower bound as monetary values are not reported for all transactions in the database. Kenya to the fifth largest geothermal power producer in the world (Xinhua, 2024). Between 2010 and 2024, Chinese companies were involved in the investment and construction of 44 energy projects worth $7.3 billion.29 The bulk of Chinese activity in Kenya’s energy sector comprises EPC contracts won by large Chinese SOEs such as PowerChina and China CAMC Engineering Co Ltd to build transmission lines and substations and geothermal, wind, biomass and hydropower and solar power plants. The monetary value of these contracts, where reported, ranged from $14.5 million to $407 million. Figure 11 Number of Chinese energy-related projects in Kenya, 2010–2024 Note: excludes loan agreements. Projects are categorised as ‘cooperation’ where the nature of the transaction is unclear but is described as a collaborative project. Source: authors’ elaborations based on Janes (2024) 0 2 4 6 8 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Number of projects Contract Greenfield M&A Cooperation 31 Transmission and distribution projects, mostly composed of engineering contracts won by Chinese firms, represented twofifths of projects over this period and collectively reached $1.5 billion, or 21% of the value of all energy projects (Figure 12). Renewable power generation projects collectively accounted for 30 Between 2010 and 2023, Chinese construction or financing of other renewable sources such as solar (2 projects), wind (2 projects) and hydropower (3 projects) was less common. over $1.7 billion worth of projects, with most of these focused on geothermal development (10 projects).30 The highest valued transaction was Shanxi Fenxi Mining Group’s $3 billion acquisition of two coal blocks in the former Eastern Province in 2011. Since 2020, there have been no new fossil fuel energy investments or construction contracts. Figure 12 Composition of Chinese energy investments in Kenya by project value, 2010– 2024 Note: ‘Fossil fuels’ includes a coal development and an oil terminal construction project. ‘Other’ includes one nuclear power plant project, one waste heat recovery project and one waste-to-energy power generation project. Percentages based on projects for which monetary values were reported. No project values were recorded for 40% of transactions. Source: authors’ elaborations based on Janes (2024) 10% 21% 46% 2% 6% 7% 9% H y d r o p o w e r T r a n s m i s s i o n & d i s t r i b u t i o n O t h e r G e o t h e r m a l W i n d S o l a r F o s s i l f u e l s 32 2.4 Impact assessment: how is China contributing to Kenya’s energy transition? China is an active contributor to Kenya’s energy transition through trade, clean energy technology supply and project development. Chinese presence in the energy sector has been most visible in terms of technology and equipment supply. Imports of Chinese clean energy technology components such as fully assembled solar panels, batteries and EVs have been cost-competitive options to meet local demand. Chinese SOEs have been winning bids to build renewable power generation plants (with no fossil fuel activity since 2020) as well as crucial electricity infrastructure such as highvoltage transmission lines and substations. Chinese financing has provided essential capital for Kenya’s energy infrastructure development, though with mixed economic impacts. High initial capital requirements for any energy sector project are the main challenge with scaling renewable energy in Kenya. Projects financed by China Eximbank, such as the Olkaria IV Geothermal Project and Garissa Solar Park, have frequently subcontracted Chinese engineering companies, limiting the economic spillover effects for the local economy. At the same time, Chinese contractors have demonstrated competitive advantages that Kenyan stakeholders value. In construction projects, Chinese 31 Source: stakeholder consultation with MDB energy experts. 32 Source: stakeholder consultation with MDB and local electricity sector experts. EPC firms have also tended to outperform other foreign contractors in terms of respecting project timelines and addressing right-of-way challenges that come up during project implementation.31 Chinese engineering companies have established market dominance in Kenya’s energy infrastructure sector through aggressive bidding strategies – there have been examples of large tenders only attracting Chinese bidders. This competitive approach has reshaped the contractor landscape, with Chinese and Indian firms now dominating bids in a space where European and Japanese companies once competed more effectively.32 In many cases, such as the Menengai Geothermal Project where each IPP is responsible for their own procurement and contractor selection, stakeholders say it is too early to tell if there is a quality difference between foreign contractors. Kenya’s approach to energy sector financing is evolving, and Chinese investors have not yet stepped up. Historically, the Government of Kenya would directly fund the Kenya Electricity Generating Company (KenGen) with development partners providing supplementary loans to cover funding deficits. However, with Kenya’s increasingly limited fiscal space, the government has pivoted toward PPPs. For example, the Nairobi Expressway, recently developed under a design-build-finance-operatetransfer PPP model, was fully financed by the China Road and Bridge Corporation, 39 energy corridors and industrial parks. By 2030, Mozambique plans to establish at least one industrial park as a model for future expansion, with new parks and corridors forming the core of its industrial development strategy (Government of Mozambique, 2023). Already a producer of minerals such as natural gas, gold, titanium ores from heavy sands, and graphite, Mozambique is now seeking to capitalise on its resource wealth by moving beyond extraction. The aim is to retain greater value through domestic processing, not only of its own reserves but also of resources sourced from landlocked neighbours such as Zambia and Zimbabwe (ibid.). However, as with other areas of its energy and industrial strategy, it remains unclear whether strategic planning and quantitative targets for attracting FDI into the sector have been set. Mozambique’s ETE estimates that implementation will require approximately $80 billion. Investments before 2030 will focus on grid expansion and hydropower, with post-2030 efforts shifting toward large-scale solar and wind projects (Government of Mozambique, 2023). To finance transition, Mozambique will develop a financing strategy that leverages different sources of funds. PPPs are set to play a key role in funding largescale strategic projects, while targeted public support will focus on enabling infrastructure, feasibility studies, and risk mitigation instruments. Given fiscal constraints, spending on enabling projects rather than directly investing in large-scale developments will be prioritised (ibid.). 41 Source: stakeholder consultation with energy sector advisor (2). Institutional and financial constraints may impede progress toward its energy transition and green industrialisation aspirations. From an institutional perspective, stakeholders have noted a lack of coordination in developing a comprehensive strategic vision. The ETE published in 2023 is the key energy sector strategy but new strategies may be in development, leading to uncertainty about long-term planning. Strengthening institutional capacity is essential to bring new renewable energy capacity to the grid, manage the country’s LNG revenues, and allocate resources toward enhanced climate adaptation given the country’s high vulnerability to climate risk. A fragmented institutional landscape also creates difficulties in implementing tax and import duty exemptions for renewable energy equipment under the economic stimulus package, which could help reduce the cost of imported technology. When it comes to financial sustainability, Mozambique’s stateowned energy company, EDM, which oversees the country’s electrification policy, struggles with cost recovery and improving its financial and operational performance. Electricity added to the grid since 2015 sourced by EDM from its own sources as well as HCB and IPPs has been both more expensive and more carbon intensive. With HCB’s lower-cost electricity exported to South Africa via SAPP, the government will need to decide whether to continue exporting its capacity into 2030s or redirect the electricity to power domestic industrial development.41 40 3.2 Trade in clean energy technology China is Mozambique’s second largest export destination (after India), accounting for over 14% of all exports, valued at $1.2 billion, in 2023. The main products purchased by China include natural gas, coal, heavy sands, oilseeds and fruits and graphite.42 In the same year, China was also the second largest source of imports (after South Africa), with $1.4 billion, focused on the supply of agricultural materials, tires, tractors and cars for transporting goods, among others (Bank of Mozambique, 2023). The trade balance favours China. Mozambique relies on imports of renewable energy equipment and components. The costs of importing these products are high and imported components related to renewable energy projects mostly come from China. For example, China is the main source of solar technology, including the equipment needed for off-grid projects and larger grid-connected plants such as the 19 MW Cuamba solar plant, the country’s first combined utility-scale solar and energy storage plant.43 In 2023, 62% 42 In 2023, Mozambique was the second-largest exporter of graphite in the world, after China. Graphite is the main material used for the anodes of lithium-ion batteries (Zhao et al., 2024). 43 Shared during stakeholder consultation with development partners. 44 Source: WITS. China and Mozambique report markedly different trade volume data on renewable energy equipment products. In theory, the volume of China’s exports of solar panels should be identical to the volume of Mozambique’s imports of solar panels, but the values reported by Mozambique are lower. This signals imperfect data collection by one or both countries. However, the trade patterns reported by Mozambique are broadly in line with those depicted in Figure 14. For consistency with the rest of the paper, and for its more up-to-date information, we use the volumes reported in China’s customs data. We use data reported by Mozambique (to WITS) to assess the relative share of imports from China compared to other trade partners. 45 Data source: WITS. of Mozambique’s assembled solar PV panels came from China.44 This is despite higher import duties for Chinese imports. According to one analysis, the total tax burden applied to the imports of these goods can be as high as 36% (including VAT and customs duties); import duties between SADC countries, and between these and the EU, are 0% (ALER and AMER, 2023). That the majority of renewable products are still sourced from China signals their relative affordability, a trend that is not expected to change soon. Given the relative nascency of utilityscale wind projects in Mozambique, trade volumes of wind turbines are unsurprisingly low, with no clear regional pattern across the years. Just over half (51%) of lithium-ion batteries between 2017 and 2023 came from China, while 31% were imported from South Africa. Japan is the biggest exporter of electric vehicles to Mozambique, accounting for 53% of imports over the same period.45 41 Figure 14 China’s annual exports of clean energy products to Mozambique by trade value, 2017–2024 Source: authors’ elaborations using Observatory of Economic Complexity and Ember based on General Administration of Customs of the People’s Republic of China.46 46 The product mapping follows the Harmonised System (HS) by the World Customs Organisation. The HS product codes used are 850231 (wind turbines); 85414020 and 85414300 (solar panels); 850760 (lithium-ion batteries); 870380 (fully electric motor vehicles). 47 The other lenders in this syndicate were Credit Agricole, Sumitomo Mitsui Banking Corporation, Export-Import Bank of Korea, ABN Amro, BNP Paribas, HSBC, Korea Development Bank, Natixis, Societe Generale, Standard Bank, UBI Banca and UniCredit. 3.3 Energy-related investment and lending 3.3.1 Lending China’s official energy-related lending to Mozambique has been a mix of commercial and concessional lending, primarily for LNG projects, which are in line with Mozambique’s plans to transform the economy and energy exports. Between 2014 and 2020, Chinese policy and commercial banks committed five loans, collectively worth over $1.7 billion. The Rovuma Basin off the coast of Cabo Delgado Province contains one of the continent’s largest reserves of natural gas and its development as a global LNG hub is key to Mozambique’s economic transformation ambitions (AfDB, 2019). In 2017, three Chinese banks – the Bank of China ($500 million), ICBC ($550 million) and China Eximbank ($500 million) – contributed to a $4.66 billion international syndicated loan agreement for the Coral South Floating Liquefied Natural Gas Project, the first floating natural gas facility built on the African continent.47 Later, $ millions $ millions$ millions $ millions Solar panels Wind turbines Lithium-ion batteries Electric vehicles (EVs) 0 5 10 15 20 25 30 35 2017 2018 2019 2020 2021 2022 2023 2024 0 0.002 0.004 0.006 0.008 0.01 0.012 0.014 0.016 2017 2018 2019 2020 2021 2022 2023 2024 0 2 4 6 8 10 12 14 16 18 20 2017 2018 2019 2020 2021 2022 2023 2024 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 2017 2018 2019 2020 2021 2022 2023 2024 42 in 2020, ICBC contributed to another $1.26 billion syndicated loan for the Rovuma Liquefied Natural Gas Project.48 Due to its market uncertainty and political environment, Mozambique ranks among the riskiest countries in the world to do business (World Bank, 2021). In all Chinese lending to LNG projects, credit insurance from Sinosure was used to mitigate investment risks. 3.3.2 Equity investment and construction activity Although China is one of Mozambique’s top 10 foreign investors, it lags behind the leading foreign players. In 2023, China contributed just 0.6% of net FDI flows in Mozambique, with investment activity focused on the extractive and manufacturing industries (Bank of Mozambique, 2023). The main investors were Mauritius, South Africa and the Netherlands, jointly accounting for nearly 85% of FDI in the country. At the project level, between 2010 and 2024, Chinese companies were involved in the investment and construction of 13 energy projects worth $13.76 billion.49 China’s presence in Mozambique’s energy sector is focused 48 This project is current affected by the armed insurgency in Cabo Delgado. The other (commercial) lenders in this syndicate were MUFG, Standard Chartered, Mizuho, Societe Generale, SMBC, ABSA and IDC. 49 This estimate likely represents a lower bound as monetary values are not reported for all named transactions in the database. 50 Source: stakeholder interviews with energy sector experts. 51 The Rovuma Basin’s Area 4 is owned by a consortium of Mozambique’s state-owned petroleum company and foreign developers, with the following shares: Eni (25%), ExxonMobil (25%), China National Petroleum Corporation (20%), Korea Gas Corporation (10%), Galp Energia (10%), Empresa Nacional de Hidrocarbonetos (10%) (Eni, 2017). on EPC contracts rather than IPPs that own or operate power generation plants. Out of the 13 projects recorded over this period, eight were engineering service contracts awarded to Chinese companies for the design and construction of transmission lines and substations, gas pipelines and transportation (Figure 15). Chinese SOEs such as China Energy Engineering Group and PowerChina have won EPC contracts from EDM. In general, Chinese companies tend to bid for larger capital project tenders, such as World Bank or African Development Bank construction projects.50 The remaining projects comprised two greenfield projects, two M&As and one cooperation agreement for oil and gas exploration and production between the China National Petroleum Corporation and the Empresa Nacional Hidrocarbonetos de Mozambique in 2016. China’s National Petroleum Corporation has a 20% ownership stake in the Rovuma Basin’s Area 4 natural gas development site.51 43 Figure 15 Number of Chinese energy-related projects in Mozambique, 2010–2024 Note: excludes loan agreements. Source: authors’ elaborations based on Janes (2024) 52 World Bank (2023) Private Participation in Infrastructure database. Between 2010 and 2014, Chinese companies were contracted for the construction of several high-voltage transmission lines and substations, which are a priority investment area for the government. There is currently no connection between the three main transmission grids in the country, and interconnecting the southern, central and northern electricity systems into a single integrated system is a priority for ensuring universal energy access (Government of Mozambique, 2023). Transmission network improvements are also key to Mozambique’s ambitions to position itself as the energy hub in the SAPP market. Some Chinese transmission and distribution projects have also aimed to connect to industrial sites – for example, in 2022, PowerChina signed a contract develop a 104 km transmission line linking to the Nipepe graphite mine developed by China’s DH Mining. Large utility-scale renewable energy projects in Mozambique are still relatively nascent, and Chinese developers have not yet made investments into the country’s solar PV or wind energy infrastructure. European companies – such as Norwegian Scatec Solar (Mocuba Solar Power Station) or French Neoen (Metoro Solar Power Station) – have been more active in this area.52 In 2023, China’s Tsingshan Group signed a memorandum of cooperation with the government of Mozambique to develop the Mozambique Green Industrial Park in the country’s central Sofala province. The $40 billion project will be the country’s largest special economic zone and it plans to develop clean energy power sources such as solar and wind energy and to establish a local new energy batteries and solar photovoltaic industry (Seetao, 2023). 0 2 4 6 8 Oil & gas power generation T&D LNG pipelines and transportation Number of projects Contract Greenfield M&A Cooperation 44 3.4 Impact assessment: how is China contributing to Mozambique’s energy transition? China has a longstanding relationship with Mozambique and has engaged in various sectors, but its participation in the energy sector has focused on gas projects and mostly happens through trade, providing clean energy technologies and EPC projects. Like Kenya, China’s presence in Mozambique’s energy sector has been most visible in technology and equipment supply.53 Imports of Chinese solar panels align with Mozambique’s goal of expanding off-grid electricity access. However, high costs remain a barrier, as tax exemption measures have not been implemented, making it difficult to develop sustainable business models for solar home systems. Huawei is among the Chinese companies that seek active participation in Mozambique’s clean energy rollout, having participated in annual conference of the Associação Moçambicana de Energias Renováveis.54 Huawei provides residential, utility-scale, and microgrid solar PV solutions and has signed strategic cooperation agreements with other African countries, including Ghana (Colthorpe, 2022).55 China’s official energy-related lending to Mozambique consists of a mix of 53 Source: stakeholder consultation with government representative in energy sector. 54 Source: stakeholder consultation with energy sector association (1). 55 The company has supplied solar PV and energy storage system solutions for what is reportedly Africa’s largest solar PV generation project with 1 GW of solar PV capacity and 500 MWh of battery storage. 56 Source: stakeholder consultation with energy sector advisor (1). commercial and concessional loans, primarily targeting LNG developments, in line with the ETE priority to develop gas as a transition fuel. However, as Mozambique seeks to expand gas production, some stakeholders have emphasised the need for greater analysis of the country’s exposure to transition risks under different energy transition scenarios.56 China is not the only country financing the sector; for instance, TotalEnergies’ project most recently secured funding from the US International Development Finance Corporation (DFC). A range of multinational companies, including Eni and ExxonMobil, are involved in gas field developments, notably projects such as Rovuma LNG and Coral Sul FLNG. The National Development Strategy assumes that, until 2030, LNG will support economic growth, but in the longer term, growth and income are expected to come from other sectors. The economic benefits of LNG investments to the government depend on the international LNG market, raising concerns about the risk of stranded assets, as these projects primarily target exports rather than domestic energy supply. The Government of Mozambique has arguably prioritised the urgency of restarting stalled projects. This was underscored by President Daniel Chapo’s early meeting with the TotalEnergies CEO in January 2025, shortly after taking 45 office, to discuss the resumption of LNG and gas-to-power projects, which had been delayed due to ongoing insecurity (Hernandez and Roelf, 2025). Project financing was later approved by the U.S. Export-Import Bank, which reportedly re-authorised a $4.7 billion loan to TotalEnergies for project development (Johnston and Smyth, 2025). The issue remains closely tied to government legitimacy and power structures. In terms of financing the sector and providing technical assistance, other international players are taking a more active role as Mozambique seeks to scale up its renewable energy, transmission, and gas infrastructure. European donors from Belgium, Norway and Sweden have provided financing, including grants, while MDBs such as the World Bank and the African Development Bank (AfDB) are supporting the strengthening of largescale grid infrastructure and backbone transmission lines.57 Most of the renewable capacity in the pipeline through 2030 is expected to come from solar power, with financing and implementation led by European financiers and companies.58 Solar and wind components of the ETE will reportedly be financed by GET.transform, with a strategy involving government 57 Source: stakeholder consultation with energy sector association; stakeholder consultation with government representative in energy sector. 58 Source: stakeholder consultation with energy sector association. 59 Source: stakeholder consultation with energy sector advisor (2). 60 Source: stakeholder consultation with development partner (3). 61 Source stakeholder consultation with energy sector association. 62 Source: stakeholder consultation with government representative in energy sector; stakeholder consultation with energy sector association. representatives, private sector and donors. Their goal is to address key barriers to investment, including establishing the right regulatory framework for PPPs, addressing tariffs, improving procurement processes, and refining concession agreements to make the sector more attractive to private investors.59 However, financing delays, linked to the country’s risk profile, have been a challenge, and securing the release of funds remains a key priority.60 With a new president in office, it remains to be seen which projects will be prioritised under the ETE.61 China has yet to make significant investments in large-scale renewable energy projects in Mozambique, with its primary presence so far in EPC contracts for fossil fuel and transmission infrastructure. As Mozambique works to expand its energy generation and transmission infrastructure to address infrastructure gaps, several stakeholders noted that Chinese companies have approached the country to explore ‘turnkey’ projects in the renewables sectors, where they would provide labour, materials and oversee the process. However, they are yet to participate as IPPs or engage in tender processes.62 As in other countries across Africa and globally, Chinese companies have been successful in securing 46 construction contracts for projects financed by MDBs. A Chinese contractor, for instance, was awarded the contract to implement the substation and high-voltage components of the Temane Transmission Line, a major project co-financed by the AfDB, World Bank, Islamic Development Bank, the OPEC Fund and Norway.63 While green industrialisation is included in the ETE, Mozambique appears to be in the early stages of planning its implementation.64 The extent of China’s contribution Tsingshan Park, once completed, also remains to be seen. Mozambique’s energy fund, FUNAE, operates a solar panel assembly plant in Maputo Province, built in 2013 with loan financing from the Indian EXIM Bank. However, it requires operational updates, and its capacity to supply at scale remains unclear.65 China’s Tsingshan Park plans to use clean energy sources such as solar and wind and aims to establish a local new energy battery and solar PV industry. This presents China with an opportunity to contribute to the country’s green industrialisation. There is evidence that China has constructed infrastructure to connect its industrial sites (including mines) to power grids, given its significant mining exports from Mozambique. However, the extent, systematic nature, and spillover benefits of this investment for Mozambique’s electrification remain unclear. For example, while China developed transmission and distribution 63 Source: stakeholder consultation with MDB representative. 64 Source: stakeholder consultation with development partner (2). 65 Source: stakeholder consultation with government representative in energy sector; stakeholder consultation with energy sector association; stakeholder consultation with development partner (3). infrastructure in Niassa Province, where only 25% of the population has access to electricity, it is uncertain what benefits this has provided to the local population and how systematically this approach has been applied. Mozambique sees an opportunity to capitalise on its mineral endowments in the energy transition and move up the critical mining value chain, but the timeline for its aspirations – and how China will contribute – remains unclear. A lack of existing industrial capacity and elevated country risk pose significant challenges to attracting FDI. Political unrest has disrupted production at the existing GK Ancuabe graphite mine since 2023, while development at the Balama mine, which secured DFC financing in September 2024, also faced local unrest (Club of Mozambique, 2024). Whether China, already a major minerals exporter from the country with presence in its minerals sector, will invest in processing capacity in the sector remains uncertain. At the recent FOCAC summit, China signalled its interest in expanding cooperation in infrastructure, energy and minerals ‘to boost Mozambique’s industrialisation and economic diversification’ (MFA of the PRC, 2024b). The employment impact of Chinese energy investments and construction activity in Mozambique remains uncertain. Similar to Kenya, 47 unemployment is a significant challenge and a key priority for the country’s economic development. Limited evidence is available on the extent of skills transfer from expert engineers working on Chinese EPC projects, as well as their impact on local value addition. Stakeholders suggested that Chinese projects are perceived in-country as employing local workers primarily in low-paid, unskilled positions. However, there is limited evidence on how this applies specifically to the energy sector, as China has had greater visibility in other industries.66 The energy sector is a relatively recent area of engagement for China in Mozambique, and perceptions of China’s involvement are often considered within the broader context of its overall engagement in the country. China’s approach in the sector appears to mirror its engagement in other countries, where it does not participate in donor coordination mechanisms with government agencies, such as the energy sector working group.67 Indeed, as pointed out by one of the stakeholders, China is perceived as a business partner rather than a development one.68 Regarding risks and opportunities, concerns have been raised about the transparency of China’s involvement in infrastructure projects, particularly in the context of weaker institutions.69 However, evidence of China’s 66 Source: stakeholder consultation with development partner (1). 67 Source: stakeholder consultation with development partner (2); stakeholder consultation with MDB representative. 68 Source: stakeholder consultation with development partner (2). 69 Source: stakeholder consultation with development partner (1). impact with regard to rule of law and government effectiveness in Mozambique’s energy sector remains limited. 48 4 China’s energy projects and clean energy technology trade in South Africa Having explored China’s expanding clean energy footprint worldwide, including in Kenya and Mozambique, this section now looks at South Africa’s energy transition needs and examines how – if at all – China is meeting these through trade, lending and investment flows. It includes analysis of the implications of these changes for South Africa’s lowcarbon transition plans and domestic energy sector, as well as other sectors of the economy. In contrast to Kenya and Mozambique, South Africa benefits from mature capital markets and a highly developed banking sector, which facilitates mobilisation of clean energy capital through a range of instruments. South Africa is an upper-middleincome economy with a population of just over 60 million, a third of whom are aged 18 to 34 years old. Post-pandemic economic recovery has been constrained by supply-side factors including infrastructure bottlenecks, low productivity and a weak business environment. The country has high levels of poverty, with around 63% living below upper middle-income threshold. Unemployment remains a pressing socioeconomic issue, with just over a third of South Africans out of work (World Bank, 2024a). The young are particularly affected, with over 60% unable to find employment, largely due to a lack of skills. The government’s low-carbon transition plan aims to tackle both unemployment and poverty (The Presidency of the Republic of South Africa, 2022). South Africa’s political and economic relationship with China has evolved significantly since the two countries first established ties in the late 1990s. Energy security is critical to addressing South Africa’s socioeconomic challenges and fuelling economic growth and competitiveness in manufacturing and other sectors. As South Africa seeks to grow its renewable energy portfolio and phase out coal, enhance grid and transmission infrastructure, and build out low-carbon supply chains, there are significant opportunities for China and other stakeholders to support its national development and energy transition. 4.1 Overview of energy sector and green industrialisation ambition 4.1.1 Overview of the energy sector South Africa has made major gains in improving electricity access, 55 neither Eskom-contracted nor privately contracted power projects in the country.80 Moreover, the majority of debt financing comes from local, South African banks. Recently, however, Chinese EPC firms have gained an increasingly large market share in the construction of (clean) energy sector projects, particularly solar. Between 2010 and 2024, Chinese companies were awarded contracts to build 13 projects worth $1.07 billion.81 Eleven of these have been awarded since 2022, and 69% of all contracts are for solar power plant construction or solar panel installation. Beyond EPC contracts, Chinese firms dominate the supply chain for solar panels and inverters. Major recent projects include: • Construction of the Mooi Plaats ground photovoltaic power plant. The 283 MW project in the Northern Cape Province, announced in 2024, is a partnership between Trina Solar (a Chinese solar PV manufacturer) and two construction and engineering companies – China Gezhouba Group and China International Energy Group. • Construction of the Redstone Concentrated Solar Thermal Project. In 2021, SEPCOIII Electric Power Construction Corporation, a PowerChina subsidiary, signed a 80 South Africa’s Private Power Projects Dashboard maintained by the Power Futures Lab at the University of Cape Town (https://powerfutureslab.co.za/sa-ipp-data). 81 This estimate likely represents a lower bound as monetary values are not reported for all transactions in the database. $704 million deal with ACWA Power to develop a 100 MW concentrated solar power plant in the Northern Cape Province. The project was connected to the grid in 2024, and created 2,500 jobs, of which 650 were filled by local community members (FOCAC, 2024). • Construction of the De Aar Central Solar Power Plant. In 2024, PowerChina signed an agreement with SolarAfrica Energy, a South African PV developer, for a 342 MW plant which will supply power to data centres and industrial customers. The plant will be the country’s largest single solar power plant by installed capacity. Over this period, Chinese companies have also been involved in the construction of battery energy storage systems and partnerships to localise solar module production. For example, in 2022, Pinggao Group, a subsidiary of State Grid Corporation of China, won a contract to develop an 80 MW storage facility in the Western Cape. In the same year, Chinese Talesun Solar partnered with ARTsolar, South Africa’s only locally owned solar panel manufacturer, to develop a domestic production facility for large-format PV modules. ARTsolar had previously also signed a manufacturing agreement with BYD, another Chinese manufacturer of renewable energy and battery technology, in 2014. However, at 56 the time of writing, solar panel production in South Africa is solely focused on assembly using solar cells typically imported from China.82 4.4 Impact assessment: how is China contributing to South Africa’s energy transition? China’s contribution to South Africa’s energy transition is centred on its role as a major trade partner and primary source of clean energy technology imports. South Africa is the largest export market for Chinese solar panels, and Chinese suppliers dominate domestic solar PV, lithium-ion battery, wind turbine and EV imports. Chinese clean energy technology manufacturers have been involved in partnerships for local solar panel assembly, which they have not done in other countries in the region. While South Africa is the main destination for Chinese FDI in Africa, Chinese financiers, SOEs and private companies have played a limited role as equity investors with ownership stakes in clean energy projects or power sector projects generally. Chinese financial institutions have also played a limited role in debt-based project finance, which is mostly provided by local South African banks. There has been no new official Chinese bilateral energy sector lending since 2018, so Chinese financial institutions have not contributed to bridging the 82 Source: stakeholder interview with South African industry development expert. 83 The EPC landscape for energy projects was historically dominated by a mix of European firms. Source: stakeholder interview with South African energy sector expert. 84 Source: stakeholder interview with South African energy sector expert. country’s ZAR 647 billion electricity sector infrastructure investment need between 2023 and 2027, through bilateral channels (The Presidency of the Republic of South Africa, 2022). Earlier lending from CDB was directed towards financing large-scale coal power projects in Mpumalanga and Limpopo provinces. Chinese EPC firms have gradually established credibility in South Africa’s energy market as projects have benefited from reduced costs. Despite initial scepticism from local banks, which are typically the financiers of such projects and have strict quality requirements, there has been growing involvement of Chinese contractors in the development of clean energy projects since 2022. This trend reflects their ability to underprice most of their other foreign counterparts, for both engineering, procurement and construction, but also operations and maintenance of installations.83 As the South African energy market has become increasingly price-competitive, these firms have successfully demonstrated they can meet standards while offering more competitive pricing than previously favoured and more established Western companies.84 Some of the constraints to Chinese involvement towards South Africa’s energy transition are inherent to the country’s operational environment. For example, there is limited evidence 57 of Chinese engagement in early-stage capacity building and project preparation, but this lack of project readiness support and early-stage funding is common in South Africa, which exacerbates the limited pipeline of bankable clean energy projects (de Aragão Fernandes et al., 2023).85 South Africa’s historic reliance on coal poses challenges for the social and economic impacts of phasing out coal. The government’s just transition commitments will directly and indirectly impact jobs in the energy and automotive sectors and will require a skilled workforce for the deployment and maintenance of clean energy projects. At the moment, there are several obstacles to this, including limited domestic re-skilling efforts and the spatial mismatch between ‘green’ jobs and the coal field regions where coal workers live. While Chinese imports have facilitated rapid renewable energy deployment, the heavy reliance on imported components poses a potential constraint on the development of a local clean energy manufacturing industry. South Africa’s ambition to increase local content and value addition in sectors such as solar panel manufacturing and EVs faces challenges from the cost-competitiveness of Chinese imports and is at risk of remaining limited to assembly using imported components. 85 This view was also shared during a stakeholder consultation with a South African industry development expert. 86 Authors’ calculations based on the South Africa Private Power Projects Dashboard of the Power Futures Lab. Includes power projects that reached financial close, are in construction or operation and above 5 MW of generation capacity. These are a combination of solar, wind and battery energy storage projects. 87 The US commitment to South Africa’s JETP has included $56 million in grants and $1 billion in commercial investments from the DFC, which combined represent less than 10% of the total JETP pledge. Local stakeholders argued that part of the reason why Chinese equity investors are not particularly active is in South Africa is because they view selling their products directly as more profitable than shifting operations or ownership stakes abroad. In turn, South African manufacturers find it challenging to access the Chinese market. Trade flows with the UK and EU are much more balanced. South Africa has a diverse set of partnerships for its energy transition goals and, to date, IPG members have dominated equity investments and lending. For example, between 2022 and 2024 just three European companies – Engie, Scatec Solar and EDF, held 57% of equity shares for large Eskom-contracted power projects.86 The IPG members have pledged the majority of energy transition financing, though the US’s recent exit from the JETP leaves a financing gap which will have to be compensated by alternative sources (Chime, 2025).87 58 5 Looking forward 88 This study had limited scope to deep dive into the ESG or risk governance of individual Chinese projects. China is aiming to raise standards in energy infrastructure projects, and it will be important to watch whether this ambition materialises on the ground. The expansion of Chinese financial institutions, SOEs and private companies into overseas energy sectors and green value chains has been driven by clear policy signals from Beijing and commercial drivers both domestically and abroad. First, with domestic renewable energy markets approaching saturation, China’s clean energy industries are seeking international markets to export their technologies and services. Second, Chinese companies are capitalising on business opportunities for construction, equipment and engineering expertise in underdeveloped power sectors abroad, often supported by Chinese financial institutions. Chinese engineering firms have also demonstrated their competitiveness by participating as contractors in new markets, as evidenced by their participation in competitive project tenders. Third, this analysis has found examples of Chinese companies building transmission infrastructure to support adjacent sectors where they have stakes, such as graphite mining in Mozambique, but more evidence is needed to understand these linkages and what they imply for host countries. Different Chinese actors vary in their strategies and risk tolerance, which are shaped by the investment climate and governance structures of the countries in which they operate. For example, Kenya has attracted a wider diversity of Chinese energy-related investment and construction activity than Mozambique, due to a combination of the investment climate and policy ambition. Moreover, unlike in sectors such as telecommunications which have experienced a surge in Chinese M&A and greenfield activity, there has been relatively little involvement from equity investors in energy-related activity in the countries analysed. To date, Chinese companies have primarily focused on securing construction contracts and exporting clean energy technologies. More research is needed to understand China’s evolving strategy of de-risking its overseas engagement in clean energy projects. How is China’s offer to EMDEs evolving? Current debt burdens in most EMDEs mean that borrowing is no longer a viable option for the delivery of energy and clean energy technology manufacturing projects, and governments are exploring alternative financing mechanisms based on PPPs. Chinese companies have had limited engagement with these models for energy projects, and it is unclear whether China would be willing to increase equity stakes or shift clean energy manufacturing overseas.88 Lending data through 2021 indicates that Chinese 59 creditors are pivoting from large-scale infrastructure loans toward targeted commercial investments and the size of future individual deals will likely continue to decline. Domestically, strong policy signals to prioritise renewable energy and low-carbon value chain expansion to overseas markets and medium-term development plans for NEVs suggest that China will remain an important supplier of clean energy imports in EMDEs. China’s engagement in clean energy in Africa will probably remain strong given the momentum of initiatives like the Africa Green Industrialisation Initiative on the continent and its own diplomatic ambitions within FOCAC. It may also prioritise engagement with countries like Kenya and South Africa that play significant roles in the African Union and shape trade policy on the continent. What are the implications for the alternative strategies pursued by the G7? To compete effectively through the EU’s Global Gateway or the Partnership for Global Infrastructure and Investment, Western policymakers need to understand the BRI’s evolving scale, nature, and terms – particularly following China’s derisking efforts. This also requires a greater understanding of how various Chinese companies and financiers work together across sectors to create ecosystems (e.g. power-mining-logistics partnerships). For most countries, it is not realistic to compete effectively across all parts of the clean energy technology supply chain, 89 For example, in December 2024 the DFC pledged $553 million to upgrade the Lobito Atlantic Railway in Angola as part of a commitment to both secure US strategic interests in minerals supply chains and build out the low-carbon value chain in the region (DFC, 2024). and careful consideration of where to specialise domestically and where it might be better to establish partnerships or make direct investments abroad, should inform considerations of countries’ industrial strategies (IEA, 2023a).89 Outside of China, stakeholders from other countries can also significantly contribute to clean power sector development and electrification, but overall success remains dependent on African countries. Looking ahead, China’s evolving response to global dynamics will be important to watch on several fronts. First, geopolitical uncertainty in advanced economies that are key financiers of energy transitions will inform the responses of China and EMDEs. For example, given recent announcements that the US is pulling back on clean energy financing in Africa, whether China steps in to fill the energy transition gap will depend on the strength of its political ties rather than its existing (limited) equity stakes in clean energy on the continent (Auth, 2025; Chime, 2025). However, policy inconsistency from the US and the new push on fossil fuel development threatens to lock-in emissions and reverse progress on policy efforts to phase out coal. Additionally, the localisation and regionalisation agenda for green value chains in EMDEs represents a challenge for China’s ambitions to continue expanding its reach in terms of clean energy technology exports. 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