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Unlocking the transformative potential of small-scale renewables energy in Africa

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Unlocking the transformative potential of small-scale renewables energy in Africa

Africa has access to a unique wealth of primary renewable energy supplies. It has enough solar, wind and hydro resources to power up the whole continent and to increase the economic development of all its countries. Unfortunately, those valuable resources have not been used well over the last decade. In 2017 it was estimated that two-thirds of Africa’s vast population (about 600 million people) currently have no access to energy, and only seven countries on the African continent have electricity access rates over 50%.

Access to electricity is a critical element for development; it is needed for powering water supplies, telecommunication services, and strengthening health care and educational delivery services, which in turn also contribute to development in rural areas, supporting new industries and creating more jobs.

On Tuesday 4th December at the African Development Bank Pavilion of the UN Climate Talks (COP24) in Poland, experts discussed how to unlock commercial finance for small-scale renewable energy in Africa.

“Energy itself is not the final objective for people in the local community. Energy is the catalyst that makes things happens for them” said Dean Cooper, energy sector market development manager at SNV, a non-profit international development organisation founded in the Netherlands, during the panel.

Even though the availability of traditional grid-connected electricity generation is slowly increasing via large-scale power plants across the continent, it is now clear that locating and creating alternative options in the “decentralized” energy space is imperative. Accessible, reliable and affordable energy for all is the way to guarantee social and economic development, and this needs to happen fast.

The African Development Bank has been addressing the obvious African energy investment gap. In 2016 African Development Bank approved a $100 million financing package to seed the Facility for Energy Inclusion (FEI), a $500 million debt platform for small-scale renewables that aims to provide debt financing to small-scale projects and to energy companies and others focused on off-grid energy solutions. This project was considered a big step for the African Development Bank to deliver on its commitments for energy access through decentralized renewables under the New Deal for Energy in Africa.  

“We started with the Sustainable Energy Fund for Africa in 2012, a multi-donor initiative providing risk capital and technical assistance for small-scale renewables of different configurations” says Joao Duarte Cunha – manager for energy initiatives and partnerships at the African Development Bank;  “What we learned with these projects is that the enabling environment has to be there in order to bring these projects to fruition. There is still a lot of work to be done in the countries and with their policymakers. We have been shifting towards more programmatic support for country scale-up programmes that can attract private investors at scale, leveraging our close relationship with African governments and credibility with the investment community”.

The African Development Bank has also pledged to commit $12 billion of its own resources by 2020, to leverage another $50 billion as part of its strategy for delivering energy to the continent, and is increasingly focused on the deployment of renewable energy solutions. By making dialogue easier amongst stakeholders who can impact Africa’s energy landscape, the Bank is creating the best possible foundation for accelerated private sector investments in Africa’s energy sector for universal energy access.

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