Off-grid Mini-grid Project Financing Remains a Challenge in Africa

  • Despite Africa’s significant energy resources endowments, over 500 million people on the continent are still without access to electricity.
  • Energy industry stakeholders in Africa have called for a restructuring of the financing mechanisms enabling the development of off-grid and mini-grid connectivity in Africa.
  • The institutional and regulatory issues in the energy sector need to be addressed so that Africa can attract more private investments.

“Meeting the universal electricity access objective within the next decade will require the roll-out of off-grid and mini-grid solutions at scale,” said Daniel Schroth, acting director of renewable energy & energy efficiency at the African Development Bank.

Schroth was speaking at the recent Energy Access Investment Forum, which took place from mid-March in Abidjan, Cote d’Ivoire.

Energy industry stakeholders that attend the forum have called for a restructuring of the financing mechanisms enabling the development of off-grid and mini-grid connectivity in Africa.

The event had support from the Alliance for Rural Electrification, GET. invest (formerly the Africa-EU Renewable Energy Cooperation Programme), the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEEE) and UNIDO.

Despite Africa’s significant energy resources endowments, over 500 million people on the continent are still without access to electricity.

“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,” said Marcus Wiemann, executive director of ARE and the 2019 conference chair.

Meanwhile, Mahama Kappiah, executive director of ECREEE, said that lack of adequate project management in Africa’s energy sector is a major drawback to private investments.

“The money is not the problem. The way projects in the energy sector are prepared for financing is the problem…we need to address the institutional and regulatory issues in the energy sector so that Africa can attract more private investments,” said Kappiah.

Joao Cunha, manager of the renewable energy initiatives division at the AfDB highlighted that the bank has been a strong supporter of Africa’s energy 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.”

Author: GBA News Desk/ESI-Africa Contributor

This article was originally published on ESI Africa and is republished with permission with minor editorial changes.

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