Driving investment into off-grid solar energy
Investments in Africa’s off-grid solar energy sector have plummeted between 2016 and 2021. CNBC Africa spoke to Patrick Tonui, Head of Policy and Regional Strategy at Gogla to make sense of these trends.
Mon, 10 Oct 2022 10:38:53 GMT
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AI Generated Summary
- Investment in Africa's off-grid solar energy sector plateaued between 2016 and 2021, posing challenges for growth and expansion.
- Despite Africa's abundant solar resources, investors have been slow to tap into the potential of solar energy in the region, hindering progress in reaching underserved communities.
- To meet Africa's energy and climate needs, $190 billion is required between 2026 and 2030, highlighting the importance of diverse capital flows including grants, equity, and debt.
Investments in Africa's off-grid solar energy sector have been a topic of concern in recent years. From 2012 to 2021, the sector raised approximately $2.3 billion in capital, including debt, equity, and grants. However, the amount of investment in the sector plateaued between 2016 and 2021, posing challenges for its growth. Patrick Tonui, Head of Policy and Regional Strategy at Gogla, shed light on these trends and the need for increased investment to meet Sustainable Development Goal 7 by 2030.
Tonui highlighted that while investment volumes fluctuated between 300 million and 350 million before reaching 457 million in 2021, there is still a significant gap in the required investment compared to the sector's needs. He emphasized the importance of encouraging more capital flow into the sector, especially for new companies seeking to scale their operations.
One of the key issues facing the off-grid solar energy sector in Africa is the lack of investment in companies that are crucial for reaching underserved communities. Despite Africa's abundant solar resources, investors have been slow to tap into this potential. Tonui pointed out that solar energy could be a cost-effective solution for the over 700 million people in sub-Saharan Africa without access to modern energy.
To meet Africa's energy and climate needs, an estimated $190 billion is required between 2026 and 2030. This capital needs to come in various forms, including grants, equity, and debt. Tonui stressed the importance of tapping into public finance to drive investment into the sector, citing successful examples from other developing countries.
In conclusion, the off-grid solar energy sector in Africa presents vast opportunities for investors to make a tangible impact on improving access to electricity in underserved communities. By addressing the challenges of capital flow and leveraging different types of investment, the sector has the potential to play a significant role in achieving sustainable energy goals in the region.
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