With climate change and energy transition still dominating the world’s energy industry, there has been a need to implement one of the world’s most important energy initiatives: the expanding of renewable energy capacity.
With this in mind, startup companies have moved to implement the renewable energy initiatives touted by world governments and companies, but they need funding to do that.
The world’s oil companies pledged to take up the funding responsibility owing to the fact that their activities have led to, and accelerated climate change.
For a while, these companies stepped up to fund clean energy projects through startup companies, but they’ve begun to reverse course, leaving startups to look for alternative funding or abandon the projects across the African continent.
While this shift could stall ambitions to diversify energy sources and lower carbon footprints, oil companies are leading the world to turn away from clean energy solutions.
The global green exit: Oil majors reversing course
Just a few years ago, global oil companies like BP, Shell, and TotalEnergies pledged aggressive decarbonization plans and began funding clean energy ventures around the world. But since 2022, several have scaled back or refocused these ambitions.
BP has walked back its 40% oil production cut target, citing profitability concerns. Earlier in February this year, BP announced that it’s planning to reduce its annual investment in renewables from around $5 billion to just $2 billion, redirecting capital toward oil and gas expansion and raising fossil fuel spending by roughly 20% to about $10 billion annually.
The company is also dropping its target of growing renewable generation capacity to 50 GW by 2030.
Shell, which once pledged to become the world’s largest electricity company, largely stopped investments in new offshore wind projects, exited power markets in Europe and China and weakened carbon reduction targets.
Shell abandoned its 2035 oil reduction goal and pivoted toward value over volume in energy investments.
Still in the dark: Africa’s Clean energy struggle
Africa accounts for just 3% of global energy-related CO2 emissions, yet remains the least electrified continent. More than 600 million people still live without electricity, most of them in sub-Saharan Africa.
Sub-Saharan Africa accounts for over 75% of the world’s population without electricity access. Countries like Nigeria, Ethiopia, DR Congo, Tanzania, Mozambique, and Chad still have millions living off-grid.
With governments and private players looking to off-grid and mini-grid renewables as a means to bridge the electricity gap, global investment in the sector i\s ever more crucial.
Decentralized solar systems, mini-grids, and clean cooking technologies offer the fastest, cheapest path to electrify rural communities.
While innovation is great, many of these solutions depend on early-stage financing, often from development funds or energy transition portfolios of large corporations, including oil majors.
But the oil industry’s green retreat could choke off critical funding pipelines for these innovations.
Africa’s energy startups are leading a quiet revolution
Over the past decade, a wave of African startups has been closing the energy access gap using solar, pay-as-you-go (PAYG) kits, mini-grids, and clean cooking solutions.
Many of these startups like Arnergy, Havenhill Synergy, Auxano Solar and ColdHubs, Instollar received early funding and technical support from Shell’s Impact Fund.
Through this, Shell and BP became key financiers of Africa’s clean energy innovation, deploying tens of millions of dollars into startups powering underserved communities. Without such backing, many of these companies may never have scaled.
Unlike Big Tech, most renewable energy startups in Africa rely on blended finance, combining grants, concessional loans, and equity. Commercial viability often takes years to establish.
Many investors still see African clean energy as risky or unproven. Oil companies filled a vital role, bridging the gap between philanthropy and venture capital.
What the industry experts are saying
Industry players and experts have largely been critical of the reversal policies of the world’s oil companies regarding clean energy investment.
Andrew Forrest, Executive Chairman of Fortescue Metals Group, a mining company, criticised Big Oil’s retreat: “If you want to make a difference in 20 weeks or 20 months, renewable energy… is going to make that difference.”
He said that focusing on fossil expansion ignores how quickly renewables can deliver results.
“We cannot have a just transition if African innovators are left behind,” says Damilola Ogunbiyi, UN Special Representative for Sustainable Energy for All.
“The private sector, especially those with historical responsibility, must step up, not step back.”
Rolake Akinkugbe‑Filani, a Director at All On Nigeria, speaking on the increasing financial strain said: “Upstream oil and gas projects benefit from dollar‑tied funding… energy ventures earning in local currencies face debt servicing pressures… but localised value chains are emerging in renewables.”
What options do African renewable startups have?
Without financing coming from oil firms looking to invest in renewables, African startups have two distinct options: look for other financing sources, or fold up.
Despite the challenges, Nigeria’s renewable startups are forging ahead, partnering with Development Finance Institutions (DFIs), impact investors, and development agencies.
But without sustained funding from deep-pocketed players like oil majors, the pace of progress could slow significantly.
To safeguard the continent’s clean energy transition, there’s an urgent need for long-term concessional capital, local manufacturing support, favourable policy incentives, and a redirection of oil profits into sustainable energy development.
Initiatives like The Global Energy Alliance for People and Planet (GEAPP), SEforALL’s Universal Energy Facility, Sustainable Energy Fund for Africa, are stepping in to fill the widening funding gap.
Progress at a time of bleak funding
Some renewable energy companies have found a way to fund their operations and deliver for their clients across the African continent.
Leading solar energy provider, Sun King, just recently secured $156 million in financing to expand clean energy to 1.4 million households in Kenya.
Sun King was able to achieve this through collaboration with Stanbic Bank Kenya, Absa Bank Kenya, Citi bank, Co-operative Bank of Kenya, KCB Bank Group, and three development finance institutions: British International Investment, Dutch development bank FMO, and Norfund (Norwegian Investment Fund for Developing Countries).
Arnergy, a renewable energy startup based in Nigeria, received $18 million in Series B funding to accelerate Nigeria’s transition to reliable, clean energy.
The company achieved this through a team of investors led by CardinalStone Capital Advisers and with participation from British International Investment (BII).
