Energy industry stakeholders have called for a restructuring of the financing mechanisms enabling the development of off-grid and mini-grid connectivity in Africa.
“Meeting the universal electricity access objective within the next decade will require the roll-out of off-grid and mini-grid solutions at scale,” says Daniel Schroth, acting director of renewable & energy efficiency at the African Development Bank.
The African Development Bank has developed financing instruments for engaging the off-grid and mini-grid sector through its sponsorship and anchor investment in the Facility for Energy Inclusion (FEI), a $500 million debt financing facility targeting small scale renewable projects.
Despite Africa’s significant resources endowments, close to 600 million people on the continent are still without access to electricity.
Clearly, inadequate investment lies at the heart of Africa’s paradox.
“This forum is certainly an opportunity for investors, project developers and other stakeholders to learn more about upcoming support schemes, innovative products and new business models to accelerate rural electrification and advance the market for decentralised renewable energies,” says Marcus Wiemann, Executive Director of the Alliance for Rural Electrification.
Mahama Kappiah, Executive Director of the ECOWAS Centre for Renewable Energy and Energy Efficiency, says aid that lack of adequate project management in Africa’s power sector is a major drawback to private investments.
“The money is not the problem. The way projects in the power sector are prepared for financing is the problem…we need to address the institutional and regulatory issues in the sector so that Africa can attract more private investments,” says Kappiah.
Joao Cunha, manager of the renewable energy initiatives division at the African Development Bank, says:
“The African Development Bank has been a strong supporter of Africa’s power sector. It’s a top priority…we can see that the sector is evolving as decentralised energy systems are fast expanding with the proliferation of off-grid technologies…so, de-risking investment upfront is key to attracting more investment.”
Long Cheng, General Manager for Africa at Trina Solar, highlights the importance of solar technologies in providing solutions that meet the needs of rural communities in Africa.
“Solar energy is also an important contributor to the continent’s climate agenda,” Cheng said.
These investments need to focus on “not just off-grid but also mini-grids,” argues Dominiek Deconinck, Fund Manager at Electrification Financing Initiative.
Business plans and discussions in this regard ought “to focus on converting interest into investments in the off-grid sector,” he maintains.