IT’S TIME TO INVEST IN CLEAN ENERGY IN AFRICA
Private-sector investment in electricity is sitting on the sidelines in Africa. Here’s how we can change that.
The math for Africa’s clean energy future is adding up. Solar lamps are spreading like fireflies across Ghana. A first-of-its-kind solar farm in Rwanda is providing electricity for 15,000 rural homes. Utility-scale solar and wind projects are being built in Morocco and Kenya. As technology costs keep tumbling, centralized and decentralized renewable projects such as these will become increasingly attractive, especially when compared with the costly diesel fuel generation that provides much of the continent’s power in rural areas.
Yet, as reporter Tom Jackson previously pointed out in this magazine, hundreds of millions of Africans — including more than 75 percent of the populations in countries such as Ethiopia, Sierra Leone and Uganda — are still living without power. The gap is especially glaring in sub-Saharan African countries, which account for 13 percent of the world’s population but a whopping 48 percent of the global population without access to electricity. Even those who have electricity face very high prices for insufficient and unreliable supplies.
The continent’s continued dependence on yesterday’s energy solutions is due in large part to money — or the lack of it. There’s simply not enough investment capital flowing into African clean energy projects.
The dearth of private institutional investor capital, such as U.S. and European pension funds, which manage trillions of dollars, is especially glaring. While utility-scale projects such as Morocco’s 510-megawatt solar project and Kenya’s 300-MW wind project have secured key financing to begin construction — the first 160-MW phase of Morocco’s project will begin operating later this year — nearly all of the capital was from public sector sources such as the World Bank and African Development Bank.
It’s important these projects are being built. In fact, they were largely responsible for global clean energy investments reaching a record US$131 billion last year in developing countries, including a highest-ever US$12.6 billion in Africa and the Middle East. Two African countries, South Africa and Kenya, attracted more than US$1 billion in clean energy investments in 2014.But public investment is not enough. Despite having a staggering potential solar capacity — an estimated 8.8 million MW in sub-Saharan Africa alone, according to management consulting firm McKinsey — renewable energy installations are not happening at nearly the rate necessary to reach the Clean Trillion goal of more than quadrupling investments in global clean energy by 2030.
