Renewable energy industry has spent $2.8 billion on renewables projects in sub-Saharan Africa (excluding South Africa) – in 2018.
The addition of $600 million than the previous year is a regional record, according to a new report published by research company BloombergNEF (BNEF).
Some 1.2GW of PV are expected to come online in 2021 outside of South Africa – that is more than twice the amount commissioned in 2018.
Country-level targets and incentives are backed by assistance from multilaterals, which remain a key source of finance and have helped roll out renewable energy auction programs.
The World Bank’s Scaling Solar program awarded just under 400MW of PV capacity over 2015-18, equivalent to 39 percent of the total installed outside of South Africa. Such auctions have yielded the lowest bid prices for solar power – several projects have won capacity at prices under $0.04/kWh.
Several sub-Saharan African countries sport an apparent surplus in installed power generation capacity.
A prevalence of take-or-pay contracts means that producers are remunerated for power that is not consumed. Whether by attempting to terminate or renegotiate contracts, governments are striving to reduce their obligations in countries such as Ghana, Kenya and South Africa.
Developers having access to guarantees and hard currency lowers barriers to investment, but risk perceptions are such that access to local financing for large-scale renewables remains a distant prospect.