Economics – Trade & AfCFTA · Editorial

By Moakanyi Magazine · China-in-Africa · June 2026

Clean energy is usually sold as a climate story. In Africa, the more consequential pitch is industrial. Manufacturers compete on the cost of power as much as the cost of labour, and Chinese-built renewables – solar parks, wind farms, vast hydropower schemes – promise the cheap, firm electricity that factories need. Whether that promise translates into competitive industry is a harder test than the megawatts suggest.

The cost case: low tariffs as an input

Kenya's Garissa solar plant shows the logic. The 55-MW facility, the largest grid-connected solar plant in East and Central Africa, was built by China's Jiangxi Corporation and financed by the Export-Import Bank of China for about US$136 million, connecting to the grid in 2018. It generates enough to power some 70,000 homes and contributes around 2 percent of Kenya's energy mix, offsetting roughly 43,000 tonnes of carbon dioxide a year.

Reporting around the plant notes welding workshops and small businesses clustering nearby to draw on its low-cost output – power as a magnet for enterprise. Renewables sharpen that effect: once built, solar and hydro have near-zero fuel cost, insulating manufacturers from the oil-price shocks that fall hardest on import-dependent economies. A textile mill paying a stable hydro tariff competes on a different footing from one exposed to imported diesel, and a predictable bill is itself a form of competitiveness when rivals abroad face volatile fuel costs.

A factory's electricity bill is a competitiveness number before it is a climate number.

The scale problem behind the tariff

There is a structural reason cheap clean power matters so much in Africa: industry there competes against rivals in economies where electricity is both abundant and reliable. A manufacturer that pays a low, stable tariff but draws it from a thin grid is not on the same footing as one in a system with deep reserves. Garissa's 55 MW, supplying about 2 percent of Kenya's mix, illustrates the gap – genuinely useful, and still a small share of what a fully industrial economy would draw.

This is where the Chinese build-out has its clearest industrial logic. Adding firm, low-cost capacity at scale begins to close the distance between an African factory's power conditions and those of its overseas competitors. The tariff is the visible number; the depth of the system behind it is what actually decides whether a low price can be sustained as demand grows.

A low tariff drawn from a thin grid is not the same advantage as one drawn from a deep one.

The catch: power is one input among many

Cheap clean power is necessary but not decisive. Ethiopia pairs abundant hydro with Chinese-built industrial parks such as Hawassa, raised by the China Civil Engineering Construction Corporation for about US$250 million in nine months, yet output has been throttled by foreign-exchange shortages, logistics and skills gaps that no tariff can fix. Low-cost electricity lowers one barrier while others stand.

The same caveat shadows the cheaper plants. Even Garissa drew local discontent over land and benefit-sharing – a reminder that a low tariff at the substation does not automatically convert into broad-based industrial gain. Competitiveness is built across a whole supply chain – power, ports, finance, skills – not at the meter alone, and a single cheap input cannot carry the rest. A country can have the cheapest power on the continent and still lose the order to a rival with a faster port.

Cheap power widens the door; it does not walk the factory through it.

The intermittency question

Solar and wind are cheap but variable, and manufacturers need power that does not stop. That is why hydropower, which is firm and dispatchable, anchors the industrial case while solar and wind fill in around it. Ethiopia's strategy of pairing the GERD cascade with solar and wind reflects exactly this logic: a base of dependable hydro carrying the load, intermittent renewables widening the margin without setting the floor.

The competitiveness gain is real where the mix is balanced and the grid can carry it – and thinner where intermittent supply meets a fragile network. A factory that loses power at noon gains little from a cheap tariff, and a cheap kilowatt-hour that cannot be relied upon is no bargain at all. The decisive variable is not the headline price but the firmness behind it.

Cheap megawatts only help the factory that can count on them at noon and at midnight.

Low-cost renewables give African manufacturers a genuine edge on one of their largest costs. Turned into competitive industry, that edge depends on everything around the meter – parks, ports, skills, grid and currency – being ready to use it.

Sources: Xinhua – Garissa solar, Brenthurst Foundation – Ethiopia industrial parks