The Iran War Exposed Africa’s Biggest Energy Weakness
Time · LC · trust 39/100
When protests over fuel prices erupted in Kenya this May, the cause lay thousands of miles away. The war between Iran, Israel, and the United States has exposed a reality that African countries know well: energy security is increasingly shaped by events beyond their borders.
The Iran War revealed how deeply many African energy systems remain dependent on geopolitical stability elsewhere. Governments should use this crisis to accelerate structural reforms and diversify their energy systems.
Across much of West Africa, power systems remain heavily dependent on gas-fired generation and imported fuels. When global fuel prices rise, electricity costs rise with them.
Nigeria generates roughly three-quarters of its electricity from gas-fired plants, while gas supplies about two-thirds of Ghana’s electricity . Higher fuel prices place immediate pressure on utilities that are already struggling with regulated tariffs that fail to recover the full cost of supplying power. Ghana’s own energy planning documents identify fuel supply sustainability as the country’s single greatest threat to reliable electricity.
The effects of the conflict don’t stop at national borders. Nigeria and Ghana are both major suppliers of electricity through the West African Power Pool, exporting power to neighboring countries like Togo and Benin. As gas becomes more expensive, the effects ripple across regional electricity markets, raising costs for utilities, governments, businesses, and households. What begins as a geopolitical crisis thousands of miles away quickly becomes an affordability crisis at home.
At first glance, the surge in prices might appear to benefit Africa’s oil exporters.
Nigeria, the continent’s largest crude producer, and Mozambique, whose liquefied natural gas exports have expanded rapidly in recent years, both stand to earn more revenue when global prices surge. But the reality is more complicated.
Across much of Africa, upstream oil and gas production is dominated by international oil companies rather than national producers. While governments receive royalties, taxes, and returns on equity stakes, much of the extraordinary profit generated during price spikes flows to private operators and their shareholders. Meanwhile, many ordinary consumers experience exactly the opposite.
In Nigeria, the removal of gasoline subsidies means that when global oil prices rise, so do domestic fuel prices. For millions of households and businesses that rely on diesel and petrol generators because the electricity grid remains unreliable, rising oil prices increase the cost of keeping the lights on.
Mozambique presents a similar paradox. The country has become a significant LNG exporter, yet the revenues generated by projects such as Coral South primarily benefit operating companies and upstream partners, while electricity access at home remains uneven.
The broader lesson is clear: resource wealth alone does not guarantee energy security.
Without stronger fiscal policies, better utility governance, or mechanisms to capture more of the gains from commodity booms, global price spikes strengthen company balance sheets far more than they strengthen national electricity systems. Higher export revenues may improve government accounts on paper, but they do little to address the structural problems that continue to make electricity unreliable and unaffordable for millions.
Conventional wisdom suggests that countries generating more electricity from renewable sources should be largely insulated from fossil fuel price shocks. Africa’s experience suggests otherwise.
Morocco and Kenya are among the continent's clean energy success stories. Morocco has spent years expanding wind and solar power , while Kenya now generates the majority of its electricity from renewable sources . Yet both remain exposed when global oil and gas prices spike.
The reason is simple. Electricity systems do not exist in isolation from the rest of the economy. Morocco still imports roughly 90% of its primary energy, forcing the government to spend over $300 million each month cushioning consumers from rising fuel costs. Kenya has likewise experienced significant price shocks despite its impressive renewable electricity portfolio .
These countries demonstrate that diversifying electricity generation makes power systems more resilient, but it does not eliminate vulnerability when transportation, industry, backup generation, and public finances remain closely tied to imported fossil fuels. It is necessary but insufficient.
The goal, then, cannot simply be to build more renewable projects. It must be to reduce dependence on energy systems whose costs are ultimately determined somewhere else.
The conflict threatens Africa's energy future in another, less visible way. Energy systems depend not only on affordable fuel, but on affordable capital.
Between 2010 and 2024, the United Arab Emirates and Saudi Arabia announced around $175 billion in African energy investments. Those commitments helped finance renewable power, transmission infrastructure, and electricity expansion across the continent. But geopolitical instability changes investment decisions.
As governments redirect resources toward defense spending and domestic priorities, overseas infrastructure investments once viewed as secure can suddenly face postponements, renegotiations, or cancellation. At the same time, investors become more cautious about emerging markets generally.
African utilities already face financing costs far above those in Europe, China, or the United States because of sovereign risk, regulatory uncertainty, and currency volatility. When geopolitical tensions increase, investors demand even higher returns, making new power projects more expensive precisely when countries need them most.
In other words, the Iran War affects African electricity systems twice: first by raising the cost of energy today, and then by raising the cost of building better systems tomorrow.…
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