Unlocking Solar Power in Africa

On the eve of Mandela Day in 2016, during the 14th Nelson Mandela Annual Lecture, Bill Gates advocated that solar was not the energy solution for Africa. He remarked that “there has been a lot of experimentation with small-scale renewable energy, including micro solar. This approach can provide individuals with some electricity for basic purposes, but it’s not going to be the solution for the continent as a whole”.

Fast-forward to today and solar power is steadily growing in Africa, with 5.8 GW being installed in 2019, compared to 1.8 GW in 2018 and 768 MW in 2017[1].

However, Africa has a capacity estimated at 1,000 GW for solar power. So why were only 5.8 GW installed in 2019? This is made even more interesting by the fact that the last 10 years have seen a steady decline in cost trends for solar in Africa, with the average installation cost decreasing from $4.1/W in 2010 to $1.4/W in 2019. And so the question remains, how does one explain this delay in terms of installed capacity?

The IEA noted that whilst  the surface area of Africa  holds 40% of the world’s potential solar resources, it currently houses only 1% of global solar capacity for generating electricity[2]. Clearly, there is huge potential for growth in solar power in Africa, and solar power in turn has the potential to grow/build Africa too. However, many factors including smart policies, the number of funds available, financing mechanisms and efficient implementation must be considered in order to effectively tap in to the power of solar, and bring electricity to the 658 million Africans who currently go without.

To learn more about this topic and find out what the solutions are to unlock Solar in Africa, you can view the Unlocking Solar Power in Africa webinar, organised by WeBridge and hosted by Boris Martor, Bird & Bird. Hear Antoine Huard, Head of Development, Générale du Solaire, Ousmane Diawara, Senior Manager, E&Y and Dana Gampel, Corporate Specialist: Strategy, Eskom discuss the latest analysis and experiences in financing solar projects in Africa.

Main Takeaways from the webinar:

• Streamline and coordinate methodologies of support from large international development organizations, so as to bring support for project development, consultation and clarification of legislation, grid and transmission investments in priority on a structured Pan African basis
• Prevent DFIs to develop projects competing with existing projects from private sector in order to avoid discouraging greenfield development
• Minimize competition from subsidized projects that brings too low expectations on the price of electricity required to make projects financially viable
• Support a Pan African guarantee agency (such as ATI-ACA) to provide financial support to State owned offtakers to facilitate financially sound structures for solar projects 
• Focus the tender processes for large projects, and allow smaller projects, up to 5MWp for instance, to connect via a simpler FIT mechanism, at least during a certain transition period
• Encourage the use of standardized contracts to capitalize on each transaction
• Propose a specific fast track procedure for all off grid projects
• Encourage lenders to rethink their risk evaluation and propose more competitive debt, both in terms of interest rates and closing costs through concessional loans for instance.
• Focus subsidies to reinforce local capacities and address the grid issues to quickly resorb transmission deficiencies, instead of funding capex of IPP projects for which there is already appetite from private sector

[1] ‘The Big 5’ Solar Plaza, https://africa.unlockingsolarcapital.com/thank-you-big-5-report

[2] https://www.iea.org/commentaries/energy-can-power-africa-s-recovery-from-pandemic-and-recession