FINANCING TO FAST-TRACK AFRICA ’ S RENEWABLES SECTOR
Edited by Sharyn Macnamara
Greater understanding of financing options must be unlocked to accelerate the growth of Africa ’ s renewables sector , as the continent confronts its energy challenges head-on .
With the world pledging a shift towards greener and cleaner energy alternatives , companies have seized the opportunity to deliver renewable energy solutions and contribute to bridging the power gap . But to successfully scale up their operations , and deliver sufficient power to the grid , these businesses require adequate financing .
That funding must also take note of the constantly evolving requirements of the renewables sector . Energy innovation must be matched with financial innovation .
Funding the Just Transition When it comes to the renewable energy market in Africa , barriers to entry are many . Insufficient infrastructure , regulatory complexities , and limited access to innovative finance models all pose significant challenges .
Recognising the importance of overcoming these hurdles , various sustainability-led African financing options , from the likes of Nedbank , the Development Bank of South Africa ( DBSA ), ABSA , and others , have emerged to support renewable energy projects across the continent .
These specialised financial offerings are instrumental in unlocking Africa ’ s renewable energy potential and creating a more favourable investment climate . While there are still challenges to overcome , these are some of the catalysts driving the just transition :
Government Governments in Africa are increasingly realising the potential of renewable energy and are introducing regulations to support its development . Through favourable policies , they encourage investment in the renewable sector , thereby providing essential support for project development , feasibility studies , and capacity building , and helping renewable-energy companies to establish a sustainable foundation .
An example of this is the recent move by Ghana ’ s government to establish a procurement scheme that encourages a competitive market rate for electricity generated from a renewable source .
Such regulations are the prerogative of policymakers in every region . It is important for African countries to retain sovereignty over their energy decisions and implement regulations that support their local energy transition .
Public-private partnerships ( PPPs ) PPPs are another sometimes complex financial solution , often used by governments to finance new projects as part of their energy transition . By combining resources , expertise and risksharing , PPPs can promote sustainable energy development . With the right partnerships in place , investors , innovators and government can join forces to finance , build and operate renewable-energy projects .
For instance , in South Africa , new regulations have been designed to facilitate private-sector investment into grid-connected renewable-energy generation . Transmission and distribution networks are still supported by government .
Banks Banks play a vital role in financing renewables initiatives . They offer a range of financial products such as loans , project finance , and guarantees to support renewable-energy companies .
Unsplash | Karsten Wurth
Today , Africa ' s renewables sector holds immense potential to address the continent ' s energy challenges and boost economic growth , while contributing to global sustainability goals .
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