According to Climatescope 2016 the momentum for deals is decisively shifting south. In 2015, more than 154 USD billion have been invested in Emerging Markets, slightly more than in OECD countries. The growth rate was also far higher. To set the record straight, it is fair to say that China has contributed the most but the picture is nonetheless impressive.
The clean energy success story is almost becoming a Solar story. The growth in Solar is driven by a fast drop of equipment cost. In 2015, the global cost of utility scale solar was approximately 1.3 USD per Watt for a solar capacity additions of about 20 GW. In some emerging countries, the cost of solar is so low, reaching 50 USD per MWh, that it is competing and in some cases outbidding coal and gas. To get a better perspective, let’s have a look at the African continent.
It is a fact that is often overlooked but the Renewables power supply footprint in Africa is actually starting from a reasonable base. It accounts for 22% of the grid-based power generation according to IEA, 2012. Most of it comes from hydropower but these dams and barrage installations, built around independence time are now either getting too old or are plagued with technical issues. North Africa as a whole have been involved for a few years now in the industry but as far as sub-Saharan Africa is concerned, we could nominate 3 clear heavyweight champions.
With the launch of the REIPPP programme, South Africa has clearly dominated the market and has taken the lead since the start of the programme in 2011. More than 5 GW ( equivalent to 4 to 5 nuclear stations) have now being deployed into the country.
Kenya has also been at the forefront of the renewable industry and is set to become the sixth biggest producer in the World of geothermal power and the first African country to build geothermal energy sources. The country has also benefited from the World Bank lighting global programme that has significantly raised the local awareness about Clean Energy and created an enabling environment. Technology and in particular mobile money solutions pioneered in this country have also had a tremendous impact.
Although in West Africa, Cabo Verde has certainly been one of the beacons of the industry, Ghana, with its favourable energy policies, good governance and size of the market is the other champion. However, with the emergence of the big brother Nigeria, this is all about to change.
2- Hot African Markets
Renewables in Africa and in particular Solar is picking up speed and in the second half of this year and also the best part of 2018 a number of hot markets would certainly attract investors.
Nigeria with the 30-30-30 vision, which stands for 30 GW of power by 2030 and with 30% of renewables would probably be one of the biggest market if not the main one in Africa in the years to come. The country is set to release green bonds in coming weeks and this would certainly boost the Nigerian market even further.
- West Africa
West Africa on it whole as well will be interesting to watch, especially after the launch of the West African Clean Energy Corridor (WACEC) during the African Utility Week Conference in Cape Town last May. The first corridor will purely be 2 GW of Solar PV.
Algeria which is set to launch its 4 GW tender would most likely be as well a market to monitor. On the second day of the Emerging PV Markets Finance Summit in London, there will actually be a special session on Algeria.
One thing I would caution people against in Africa though, is that there a huge difference between projects making newspapers headlines and those coming close to financial close. Do not be surprised as well if some of the projects with good prospects never make it to construction phase. I am sure I do need to develop further as those who are familiar with the place will perfectly recognize what we are talking about.
More insight will be developed at the Emerging PV Markets Finance Summit on 19-20 June in London. I sincerely hope to meet some of you at the conference. Do not forget to grab your RiA special offer.
- Global Solar Finance & Investment: Emerging PV Markets, http://globalfinance.solarenergyevents.com/
- Climatescope 2016, http://global-climatescope.org/en/
- BNEF_Mapping the Global Frontiers For Solar Energy Investment
- REN21 – Renewables 2017 Global Status Report