- A strategic approach that blends investment, innovation, and sound policies is imperative to unlock this energy treasure trove.
- Therefore, a multi-pronged approach involving public-private partnerships and international finance is crucial in closing this funding gap.
Image: HANDOUT
Africa is abundant in resources and opportunities, particularly in the renewable energy sector.
With landscapes that cater to solar, wind, hydro, and geothermal energy, Africa has the potential to lead the global energy transition.
Yet, the continent's vast potential remains untapped, hindered by inadequate infrastructure, investment deficits, and policy bottlenecks.
A strategic approach that blends investment, innovation, and sound policies is imperative to unlock this energy treasure trove.
The continent's renewable energy capacity is as diverse as its geography. With its vast deserts, North Africa holds some of the world's most significant solar power potential.
The Noor Ouarzazate Solar Complex in Morocco, one of the world's largest solar power stations, exemplifies how concentrated solar investment can significantly impact energy output.
Contrastingly, with its extensive river systems, Sub-Saharan Africa offers expansive opportunities for hydropower development, as demonstrated by the Grand Ethiopian Renaissance Dam (GERD), which aims to be the largest dam in Africa.
Therefore, mobilizing substantial investments is the cornerstone to revolutionizing Africa's renewable energy output.
However, the African Development Bank (AfDB) has sounded a stark warning-Africa faces a significant infrastructure deficit, requiring an estimated $130-$170 billion annual investment and a $68-$108 billion financing gap.
This is not a problem we can afford to ignore. Bridging this gap demands a concerted effort to attract public funding, private capital, and international finance.
The International Energy Agency (IEA) underscores the urgency of doubling energy investment in Africa to over $240 billion annually by 2030, prioritizing clean energy.
Therefore, a multi-pronged approach involving public-private partnerships and international finance is crucial in closing this funding gap.
Public funds can catalyze foundational projects, reducing risks for private investors, while blended finance models, combining public and private capital, can further mitigate investment uncertainties.
Notably, the Lake Turkana Wind Power project, the largest in sub-Saharan Africa with a capacity of 310 megawatts, exemplifies the transformative potential of focused investments.
This is a clear demonstration of what can be achieved with the right focus and resources.
Kenya's remarkable transition to a predominantly green energy mix, deriving 85-90 per cent of its power from geothermal, hydro, wind, and solar sources.
This has been detailed in the Trade.gov country commercial guide for Kenya, serving as a compelling testament to Africa's renewable energy potential.
Such success stories are instrumental in attracting further investments and should be replicated across the continent.
On the other hand, investment strategies, as outlined in Baker & McKenzie's report "Africa: The Continent's Sparkling Clean Energy Future," can further incentivize private sector involvement.
Clear, stable, and transparent regulatory frameworks are essential and the backbone of successful projects. They reduce risks and expedite project approvals, as demonstrated by Kenya's success.
Offering attractive incentives such as tax breaks and feed-in tariffs can improve project returns.
Further, mitigating risks through political risk insurance and currency stabilization measures can boost investor confidence. Local content requirements can also be implemented to foster regional economic development and expertise.
Lastly, investing in education and training to develop a skilled workforce is crucial for the long-term sustainability of renewable energy projects.
By adopting these strategies, African nations can create a more favourable investment climate and accelerate their transition to a clean energy future.
Technological innovation is another critical accelerator. For example, solar photovoltaic (PV) costs have declined by 89per cent in the past decade, making solar energy increasingly competitive, as the International Renewable Energy Agency (IRENA) reported.
Innovative solutions have become essential to reach remote and rural areas.
Pay-as-you-go solar home systems, popularized by companies like M-KOPA in East Africa, have revolutionized energy access in East Africa, enabling households to afford solar energy.
Similarly, micro-grid technologies provide community-based power solutions in areas beyond the reach of traditional grid infrastructure.
Therefore, investing in research and development (R&D) for such localized solutions, alongside conventional renewable projects, and fostering innovation hubs can cultivate a culture of entrepreneurship in renewable energy technologies and accelerate energy access for sustainable growth.
South Africa's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has attracted over $20 billion in private investment, showcasing the impact of clear policy frameworks.
African nations can emulate South Africa's success by prioritizing transparency, regulatory stability, and attractive incentives for renewable energy projects.
Additionally, structured power purchase agreements (PPAs), which ensure fair returns on investment over extended periods, are crucial.
Regional policies promoting cross-border energy trade can further expand market opportunities, enhancing the sector's attractiveness to large-scale investors.
Developing human capital is not just about sustaining the growth of the renewable energy sector.
It's about empowering communities and ensuring that the benefits of renewable energy projects are widely shared.
Emphasizing STEM education, as Rwanda has, prepares the future workforce for the demands of a technologically driven energy market.
Furthermore, vocational training programs focused on renewable energy installation, maintenance, and management can empower local communities, ensuring that the benefits of renewable energy projects are widely shared.
Africa's renewable energy future hinges on a unified approach that combines directed investments, innovative solutions tailored to unique regional needs, and enabling policy environments.
By drawing on the continent's diverse potential and leaning into collaboration across governments, private investors, and communities, Africa can leapfrog traditional energy models to become a leader in renewable energy.
This vision of a sustainable, accessible, diversified energy future is attainable and essential for Africa's continued growth and prosperity.
Let this be when we commit to a brighter, greener future for Africa.
John Mwendwa, is an impact-driven business climate & investment expert.