Africa has some of the world’s best solar, wind and gas resources, but sun and wind alone can’t keep the lights on around the clock. Solar peaks from late morning to early afternoon, and wind tends to blow strongest in the early morning and evening. To provide reliable, “dispatchable” power, renewable plants need a partner that can fill the gaps. The two main candidates are battery storage and gas.
A 2021 consulting study from the Executive Master of Management in Energy programme (BI Oslo and IFP Paris) compares three real-world-style hybrid designs. Each must deliver 100MW for 20 hours a day.
The three contenders
Project A (South Africa, Western Cape): 210MW solar, 103MW wind and 100MW of lithium-ion batteries. Wind covers the mornings and evenings, solar the middle of the day, and batteries fill the short remaining gaps.
Project B (South Africa, Northern Cape): two solar plants totalling about 351MW, paired with 200MW of four-hour batteries. Without wind, the batteries must store midday solar and release it in the mornings and evenings, so they need to be much larger.
Project C (Senegal, Thiès region): 150MW solar paired with a 103MW combined cycle gas turbine (CCGT) plant, which runs whenever the sun isn’t shining.
All three produce roughly the same amount of energy, about 880GWh a year, so the comparison is like-for-like.
What the numbers show
Capital costs: Project A was cheapest to build at about $1.14m per MW, followed by Project C at $1.17m and Project B at $1.28m. Combining wind with solar means less battery capacity is needed, which keeps Project A’s costs down.
Operating costs: This is where gas looks very different. Fuel and maintenance made the CCGT’s operating costs around 40 times higher than a comparable renewable plant’s, even assuming a gas price of $7.50/MMBTU.
Cost of energy: Project A delivered the lowest levelised cost of energy at about $66/MWh, followed by Project B at $69/MWh and Project C at $79/MWh.
Returns: All three projects were modelled to deliver an IRR of around 18%. NPV differed sharply, however: about $550m for both South African projects versus $254m for Senegal. Senegal’s higher discount rate (13.6% versus 9.6%) was the main reason, and the authors note that at South Africa’s discount rate, the gas hybrid would compete with the battery hybrids.
Beyond the spreadsheet
Currency risk cuts both ways. South African power contracts are paid in rand, so international investors typically demand higher local-currency returns, often above 20%. Senegal’s currency is pegged to the euro, which removes that risk.
Policy support exists in both markets. South Africa offers accelerated tax allowances for renewable equipment, and its Integrated Resource Plan targets about 41% renewables by 2030. Senegal offers VAT and customs exemptions and 40% investment tax credits, and is moving toward a 60% share for independent power producers.
Gas carries long-term risk. Senegal’s offshore gas discoveries could lower fuel costs if developed on time. However, a planned carbon tax and tightening global emissions standards could raise CCGT costs significantly. The study did not include carbon costs in its numbers, so the gas option looks better than it may prove in practice.
Social licence matters. The South African sites are in areas with high unemployment and limited schooling, which makes local skills development important. In Senegal, the developer gave the host community a free 5% equity stake in exchange for its land.
The takeaway
Where wind and solar complement each other, as in South Africa’s Western Cape, pairing them with modest battery storage produced the cheapest 20-hour power in this study. Solar plus batteries alone works but needs much more storage. Gas hybrids can be competitive, especially in markets with domestic gas, but their economics depend heavily on fuel prices, financing costs and future carbon pricing.