African countries will need to rally both private and public institutions to heed the finance gap that continues to hinder the advancement of Africa’s sustainable and clean energy goals.
These efforts are aimed at meeting the growing energy demand on the continent and working towards net-zero emission.
Speaking at the Africa Energy Week conference in Cape Town this week, Emilie Bel, a non-resident fellow with the Atlantic Council’s Africa Centre, said: “As energy demand is expected to skyrocket and inflation is rising, the situation becomes ever critical.”
Bel further highlighted challenges such as the limited supply of access to finance, a lack of infrastructure capacity building, a lack of energy storage, and the establishment of trade partnerships.
Lake Turkana wind farm in Kenya can now power one-million homes, and the construction of the Ouarzazate solar power station in Morocco is another African success story, she said.
“This is a far cry from what Africa’s potential holds as Africa currently has only 1% installed capacity in terms of solar photovoltaic roll-outs,” she said.
Given the continent’s vast solar resources, institutional financing represents 37% of total investment commitments, but this gap is too large to be bridged by public funding alone.
“African countries need to explore multiple funding sources, and the private sector now has a key role to play in financing the continuation of these infrastructure roll-outs,” said Bel.
She said this includes the United Sates, the European Union and the Organisation for Economic Cooperation and Development (OECD) states.
Financing tools to fulfil the green energy finance gap include green bonds, which appear to be the most accesible source of finance, but Africa represents only 1% of issuants of green bonds, so there are increasing opportunities for this type of funding mechanism.
Also speaking at the event, senior energy negotiator at South Africa’s Department of Mineral Resources and Energy Thebe Mamakoko, said South Africa has made clear commitments on how it would meet the net-zero goal, with policies and measures now in place.
South Africa’s Just Energy Transition Investment Plan appears to require substantial energy investment as the need to power an additional 40 000km grid infrastructure would cost an estimated US$2,7 billion over the next seven years, which would largely be derived from solar and wind sources.
In advocating the acceleration of a green energy mix, Mamakoko said: “We encourage the penetration of renewables on the continent, but we are still dealing with issues of poverty and unemployment.
“How do we ensure that these developments contribute to the improvement of the lives of people?”
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