A Spotlight on Solar Power in Africa
The new year may only be a few months old, but 2015 has already ushered in a number of exciting developments in the solar power space in Sub-Saharan Africa.
Solar projects coming online across the continent and more in the pipeline. Riding the momentum of 2014 in which it brought online the largest photovoltaic (PV) plant in Africa and joined the ranks of the top ten largest markets for utility-scale solar, South Africa last week announced the opening of KaXu Solar One, the country’s first Concentrated Solar Power plant. In Rwanda, Gigawatt Global has completed the construction of the first utility-scale PV plant in the East Africa region. In West Africa, construction is underway at the Nzema solar plant in Ghana, which, with a projected capacity of 155 MW, will be one of the top ten largest PV plants in the world when completed. In addition, Nigeria has signed a Memorandum of Understanding with a South Korean firm to develop a 1 GW solar PV farm. This is the most recent of a series of new agreements to build gigawatts’ worth of utility-scale and distributed generation projects across the country. A number of other countries, including Côte d’Ivoire and Uganda, have also initiated tenders for solar projects.
Policies and programs that facilitate investment. The World Bank recently announced its Scaling Solar initiative, a “one-stop-shop” that consolidates under one window the existing services that the Bank provides its country clients. These services include technical and legal assistance, partial guarantees of private debt, political risk insurance, and competitive financing. The design of Scaling Solar draws in part upon the South African government’s success with its Renewable Energy Independent Power Producer Procurement program, which has successfully promoted competitive and rapid tenders for grid-connected renewable energy in South Africa. Both investors and communities stand to benefit from policies and programs that catalyze further competition and capital for utility-scale solar projects.
Increased attention to distributed energy solutions. With two-thirds of the region’s population not connected to the grid, off-grid solutions are as important as the utility-scale, grid-connected projects. Recognizing the critical need to develop solutions to serve these 600 million people, the IFC invested $4.5 million last month in Off Grid Electric, a “micro-solar leasing” firm that skirts the problem of high up-front installation costs of solar PV by allowing rural customers to pay incrementally for the installation over time. Innovation in financing mechanisms for off-grid solar, such as pay-as-you-go approaches and mobile payment platforms, is being pioneered by companies like M-KOPA Solar, Greenlight Planet, Azuri Technologies, Fenix International, BBOXX, and more. In addition, venture capital and private equity firms are paying increasing attention—and funding—to the off-grid space as well. In the first two months of 2015, they have invested approximately $35 million in off-grid solar tech companies—a solid start to the year, compared with the $64 million invested in all of 2014.
In light of the colossal gap in energy infrastructure in Sub-Saharan Africa, these new investments in utility-scale and distributed solar energy are an encouraging sign of the changes to come in Africa’s power sector.