A New Power Plan: West Africa’s Road to Regional Trade and Renewable Energy

A World Bank report reveals West Africa’s heavy reliance on costly liquid fuels for power, urging a shift to regional electricity trade and renewables. It outlines practical strategies and investments to cut costs, boost reliability, and reduce emissions.

A new report authored by the World Bank’s Energy and Extractives Global Practice, with support from the Energy Sector Management Assistance Program (ESMAP), presents a sobering yet solution-driven picture of West Africa’s energy crisis. Backed by research from institutions including the ECOWAS Regional Electricity Regulatory Authority (ERERA) and the West African Power Pool (WAPP), the report underscores how the region’s deep reliance on liquid fuels such as diesel and heavy fuel oil (HFO) is financially draining utilities, inflating electricity costs, and impeding progress toward cleaner, more sustainable power systems. The document not only diagnoses the problem but also offers a compelling pathway to transformation grounded in regional trade, infrastructure upgrades, and smart financial reforms.

A Heavy Dependence with Heavy Costs

As of 2022, West Africa’s electricity generation capacity reached around 26 gigawatts, of which 4.5 GW came from liquid fuel sources. These fuels contributed 12.7 terawatt-hours of power, just 14 percent of the energy mix, but were responsible for nearly three-quarters of the region’s generation costs. Some smaller or fragile states, such as The Gambia, Burkina Faso, and Guinea-Bissau, rely on liquid fuels for 80 to 100 percent of their electricity needs. Larger economies, including Senegal and Ghana, also contribute significantly to the region’s liquid fuel-based capacity. The cost of electricity in these nations averages a steep $0.26 per kilowatt-hour, creating economic stress for both governments and consumers.

Utility companies are caught in a financial chokehold. According to the World Bank’s UPBEAT database, only six out of 25 West African utilities are able to recover operational and debt service costs, even with subsidies. Without those subsidies, just three remain solvent. These institutions often function under the weight of unsustainable contracts, outdated grid management tools, and minimal automation. Compounding the problem, many Power Purchase Agreements (PPAs) were signed hastily during periods of acute energy crisis, often on poor terms that include high fixed fees, dollar-denominated pricing, and sole-source procurement.

Regional Power Trade: A Game-Changing Opportunity

Despite the region having the most interconnected power network in Sub-Saharan Africa through WAPP, electricity trade accounts for only 7 percent of the total generated. The report’s modeling suggests that if full regional integration were realized, with transmission expanded and trade liberalized, the region could triple its electricity trade by 2030. In this scenario, reliance on liquid fuels would drop by a staggering 82 percent. Power would increasingly be sourced from gas, hydro, and solar, and the region would save approximately $1 billion in carbon-related costs by avoiding 20 million tons of CO₂ emissions.

Importantly, this shift wouldn’t come with a surge in capital expenditure. In fact, the full-trade scenario shows that while upfront investments are similar to the business-as-usual pathway, operating costs would fall dramatically due to reduced dependence on expensive liquid fuels. This approach offers a clear economic case for regional collaboration: lower fuel costs, increased energy security, and dramatically reduced emissions, all while meeting rising electricity demand.

Local Solutions While Regional Integration Matures

While full regional integration remains a long-term goal requiring regulatory, financial, and political alignment, individual countries have actionable options to reduce their liquid fuel dependence in the short term. Grid dispatch optimization and grid stability studies are low-cost interventions with potentially high returns. In Bangladesh, a similar study revealed inefficiencies that, when corrected, led to annual savings exceeding $1 billion. Ghana’s 2020 Takoradi-Tema Interconnection Project enabled thermal plants to switch from HFO to natural gas, saving $90 million in just one year.

Countries can also improve the management of rental and emergency generation assets by renegotiating contracts, improving oversight, and aligning renewals with international best practices. Where possible, converting utility-owned HFO plants to run on natural gas is another avenue. Floating Storage and Regasification Units (FSRUs), which act as mobile LNG terminals, offer an especially viable option for coastal states looking to make the switch without major infrastructure overhauls.

Unlocking Renewable Energy at Scale

Renewable energy, particularly solar, stands out as the least-cost solution for most new power needs across West Africa. Countries can scale up through a variety of mechanisms, including independent power producers (IPPs), containerized solar rentals, and public procurement. Where private investment is difficult to attract, development finance institutions such as the World Bank and the International Finance Corporation (IFC) can provide risk guarantees, concessional loans, and technical assistance to kick-start deployment and build local capacity.

Distributed energy solutions, including solar leasing for industrial consumers, are also gaining traction. In Nigeria, the West Africa Container Terminal signed a 15-year agreement with Starsight Energy to replace 30 percent of its diesel usage with solar power—an example of how innovative financing and technology can reduce reliance on liquid fuels without large upfront costs.

Country Insights and a Call to Action

The report dives into three country case studies, Sierra Leone, Mauritania, and Senegal, each facing unique challenges but united by a common struggle against costly liquid fuel dependence. Sierra Leone, despite its small system, could entirely eliminate liquid fuels through modest investments and regional trade, saving $3 million annually. Mauritania is already on track to replace HFO with gas and renewables by 2030. Senegal, meanwhile, could reduce liquid fuel generation from 4.6 to 0.7 TWh and cut system costs by nearly $50 million through enhanced trade and cleaner alternatives.

What emerges from the report is a clear, urgent message. The time for piecemeal fixes is over. Through coordinated regional power trade, strategic domestic reforms, and smart investment in renewable energy, West Africa can break its cycle of costly inefficiency. The tools, technology, and models already exist. What’s needed now is the political will and cross-border cooperation to usher in a cleaner, more affordable energy future.