Unlocking Low-Cost, Large-Scale Solar Power

Solar power has enormous potential to quickly and affordably meet the energy needs of emerging markets—including in sub-Saharan Africa, where two out of three people lack access to electricity and existing grids are under strain.

But while large countries such as India, Mexico, and South Africa have benefited from surging investment in the renewable energy sector, many of their smaller neighbors remain off the radar of solar power developers and are struggling to obtain the electricity they need.

To bridge this gap, the World Bank Group has launched Scaling Solar, a “one-stop shop” for governments that want to attract private investors to build large-scale solar plants but lack the purchasing power of bigger emerging markets where strong competition has driven down solar prices to virtual parity with oil, gas, and coal-fired electricity.

Scaling Solar includes a package of technical assistance, templates for documents, pre-approved financing, insurance products, and guarantees that take the guesswork out of whether a solar project is viable and bankable for both governments and investors.

Under the program, a country can assess a project, manage a competitive tender, build a plant, and start generating cheap, sustainable solar power within two years—a fraction of the time it would take to do so independently, and faster than other generation sources such as hydro and thermal.

Zambia, for instance, is on track to have two 50-megawatt solar facilities up and running about two years after having engaged in the program. The country’s needs are urgent as several years of drought have significantly reduced the output from hydropower plants Zambia has traditionally relied on.

Zambia’s first tender attracted 48 interested groups including top developers EDF, Enel, and First Solar, and 11 prequalified to bid. This has provided an important boost for the country, which desperately needs new sources of energy but has otherwise struggled to attract investors given the impact of falling copper prices on its economy.

“For quite a long time, we’ve had interest from the private sector to invest in renewable energy including solar. But we haven’t had the coherent structure to implement this,” said Andrew Chipwende, chief executive officer of Zambia’s Industrial Development Corporation. “With Scaling Solar, what we’ve been able to do is develop a transparent process that the private sector and public institutions can work towards.”

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SME growth key to Africa’s future, says African Guarantee Fund

Enabling access to investment finance for micro, small and medium-sized enterprises is essential for economic growth to continue in Africa

Despite the internationally recognised importance of SMEs, African small businesses often have difficulties accessing financing from the formal financial sector. Almost 50 percent of African companies identify lack of access to finance as a major constraint to doing business. The cost of ?nance, including investment ?nance, is higher in Africa than any other part of the world, and the access for SMEs is particularly limited. Very few commercial banks do small-enterprise banking in Africa. Furthermore, SME financing is often considered by many financial sector players in Africa to be a risky activity as promoters quite more often than not, fail to come up with the collateral levels required to secure bank facilities.

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Solar energy to the rescue in Zimbabwe

As it increasingly becomes clear that climate change has become a reality in Zimbabwe, many are struggling to come to terms with its effects — especially the blazing heat that now characterises most days. But for people like Tundondeghe Chiraya and her family, the scorching heat spells an uninterrupted 24/7 supply of electricity.

Having recently moved into their new house built on a stand acquired in the new settlement of Budiriro 5B Extension — neighbouring thousands of houses built by banking institution CABS under the Budiriro Housing Scheme — life would have been most unpleasant without any source of power supply, as Zesa-powered electricity is yet to reach the area because getting connected to the utility’s power lines is proving to be a cumbersome process filled with hurdles.

But power problems are slowly becoming a thing of the past as people in the area have been left with no choice but to turn to solar power.

While the investment in a solar panel and battery was initially made sulkily, the Chirayas were soon to realise turning to solar energy was one of the best decisions they could have ever made. While it might have taken sacrifice to fund the initial setting up of the solar connection in their home, the return on investment that immediately followed has left them without any hint of regret.

“I have to admit that before we connected to solar power, I wished Zesa would hasten to connect the area so we would avoid the costs, but I have since changed my mind,” said Chiraya with a beaming smile.

“With our solar panel and battery, we are able to power lighting for the whole house, the entertainment set [television, home theatre system, DStv] and to charge all our cellphones. We use gas to cook and we are planning to invest in another battery so we can also power the fridge and other electrical gadgets.

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Southern Africa fast becoming hotbed for impact investment

Southern Africa is fast becoming a hotbed of impact investment activity, with a total of US$22.53-billion in invested across the region as of mid-2015.

That’s according to a new report released by the Global Impact Investing Network (GIIN), in partnership with Open Capital Advisors.

Published this week, the report includes findings from 12 countries and shows that development finance institutions (DFIs) provided approximately 75% ($16.8 billion) of impact investing capital in the region. That number apparently covers more than 650 deals.

Several other types of investors — including VC/PE funds, foundations, commercial banks, and pension funds — actively invest in the region, with such non-DFI impact investors having deployed nearly US$5.7-billion in the region through more than 500 deals.

Of the countries covered by the report, South Africa benefited the most from impact investment, with more than 65% (US$14.7 billion) of impact investing capital going to the region’s largest and most advance economy.

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Investment Opportunities Flow from Water Initiatives

Large parts of the world are running short on water — even experiencing “desertification” — at an alarming rate. Innovative solutions being implemented by the public and the private sectors may offer interesting opportunities for investors.

Several factors are driving water shortages. Climate change could have the greatest global impact. Some projections have temperatures around the globe warming by three to four degrees (Fahrenheit) over the next century, which would affect water in many ways. Some areas would stay the same, but many others would be either flooded or stricken with drought.

Population growth is also putting pressure on clean surface freshwater resources in lakes and rivers. Brackish water must be treated before it is used for human consumption, and groundwater is harder to use because it must be pumped.

According to Julie Gorte, senior vice president for sustainable investing at PAX World Management, 96.5% of all the water on Earth is brackish and 1% is saline. Only the remaining 2.5% is fresh, and of that, 1.2% (0.03% of all water) is surface fresh water. Of the surface fresh water, 30% is groundwater, and 69% is currently locked up in glaciers and icecaps.

The more fresh surface water is used, the more it becomes contaminated. Industrial use is a major issue. For example, hydraulic fracturing, or “fracking,” takes about 5 million gallons of water to frack a well once. The water becomes highly contaminated, and treating it is extremely expensive.

Some countries with large populations are experiencing drought conditions, yet much of their water is contaminated. About 60% of China’s groundwater — which makes up about one-third of the country’s water resources — was rated unfit for human consumption by China’s Ministry of Land and Resources. In India, 80% of sewage flows into rivers without being treated, according to a 2013 study by the Centre for Science and Environment.

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