Giving Compass’ Take:
• Development in Africa provides a unique opportunity for investors to improve locals’ quality of life through access to sustainable energy sources that are likely to provide returns.
• How can investors ensure that the investment process is additive, and not predatory? Which clean energy sources are most appropriate?
• Find out how clean energy technology can empower women.
Africa relies on traditional biomass and waste fuels for almost half of its primary energy supply. An estimated 600 million people still lack access to electricity, and household air pollution resulting from the combustion of wood, dung, and charcoal leads to the death of an estimated 600,000 Africans each year.
The continent therefore urgently needs a massive rollout of modern energy services to improve the quality of life and the productivity of its underserved and rapidly growing population. Such a development would also power industrialization and urbanization.
At the same time, the world needs Africa to leapfrog to a low-carbon energy regime to help avoid catastrophic global climate change. But who will fund it?
This structural transformation in Africa’s energy sector will require innovative financing mechanisms to unlock the continent’s vast renewable energy, or RE, potential and meet burgeoning demand, thereby boosting inclusive and sustainable development.
In Africa, investments in the green energy sector offer potentially attractive returns, although RE investors face a number of challenges. The prevalence of political, economic, technical, and environmental risks on the continent means that investors demand higher returns, raising the cost of capital. Some of the main obstacles are uncertain or inadequate policy and regulatory frameworks, underdeveloped capital markets, insufficient effective demand, and a lack of managerial and technical capacity.
Read the full article on financing Africa’s green energy revolution by Jeremy Wakeford at Devex International Development
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