- About 2.4GW of solar park projects in the pipeline in at least 16 African countries
- Aggregated rooftop solar demand of around 1.04GW across 11 African countries
Africa received only five percent of the $200 billion that went into solar projects globally in 2021 due to perceived risk on the continent, Ajay Mathur, Director General of International Solar Alliance (ISA) said.
He observed that at least $400-$600 billion a year worth is available for investment, but investors are shying away as they are not confident of getting back their money. Moreover, there were issues regarding setting up of projects pipeline and processes for approvals, he said while speaking at the Lighthouse webinar organised by ISA and World Bank.
To counter this, “ISA created a risk mitigation mechanism at the last Assembly held on the 18th of October, which we believe has the answer to unlock private sector capital for Africa’s solar market,” Mathur said.
“We are creating a payment guarantee mechanism and combining this with an insurance mechanism and a small amount of seed investment money from development banks as that would be lower cost capital,” he explained
Mathur said such a mechanism provides confidence to private sector investors regarding the safety of their investment and creates an institutional mechanism for a larger ecosystem to push private sector financial resources towards solar energy projects.
Intervention needed to scale capacity
Interventions for scaling solar in Africa can lead to solar deployment of 5-7GW in 4-5 years generating investment opportunities worth $4.5-$6.3 billion, said Santosh Singh, Managing Director of the India-based advisory firm Intellecap speaking at the event.
This can unlock $8.3-11.6 billion in revenues, create 20-30 thousand jobs, enable carbon emissions reduction of 145 million-203 million tonnes and generate carbon credit revenues worth $725 million to $1 billion, he said.
He said interventions will be required to improve market readiness, in financing and for pipeline and capacity building over five years.
Stressing that solar parks are critical for rapidly scaling solar, Singh said ISA expects to realise capacities of around 1.38GW across six countries through solar parks by 2025-26.
“About 2.4GW of solar park projects are in the pipeline in at least 16 African countries,” he said adding, this includes 100 MW in Ethiopia funded through a $120 million private financing and 50MW in Mali funded through a $91 million public financing.
Decentralised solar technologies continue to be the anchor of the African solar market, he added.
“Solar mini-grids and solarisation of diesel mini grids is on the rise. Over 1.2 million solar home systems were sold in Africa in 2021 with East Africa accounting for 57 percent of the market, followed by West Africa at 37 percent,” he said.
ISA has aggregated rooftop solar demand of around 1.04GW across 11 African countries with the largest demand seen in Zimbabwe, South Africa, Democratic Republic of Congo, Cape Verde, Guinea-Bissau, and Sudan, he said.
Challenges for rooftop solar include lack of access to finance on account of low capacity, lack of capacity building of DISCOMs, lack of technology solution providers and ineffective implementation of net metering.
Africa’s total installed capacity in 2020 was 260 GW and solar capacity as of 2021 was 9.4 GW with South Africa and Egypt leading on the solar installations front, Singh said.
(Writing by Sowmya Sundar; Editing by Anoop Menon)