What You Need to Know about Distributed Renewable Energy Markets in Africa

For African countries, accessing sources of renewable energy is still a challenge, even as the rest of the world is gradually turning towards them. Renewable energy is mostly distributed through mini-grids and isolated systems. Recently, the mini-grid distribution sector has grown considerably, particularly in developing countries in Africa where centralised grid systems are unable to reach people in remote locations. Although urban migration is common in Africa, about 59 percent of the continent’s population is still rural. Mini-grids are expected to contribute 45 percent of the additional generation capacity for universal access to energy by 2030. Based on this, they are expected to play a major role in enabling countries to meet the objectives set by the United Nations Secretary General’s Sustainable Energy for All (SE4ALL) initiative.

Investment in distributed renewable energy in Africa is witnessing significant support from governments, public and private investors, even though there is a level of skepticism about its new and evolving nature.

Dr. Rose Mutiso, co-lead of the Global Lighting and Energy Access Partnership (Global LEAP) initiative, spoke with Ventures Africa to shed more light on what the future of a distributed renewable energy market in Africa could look like for interested investors and consumers.

Ventures Africa (VA): How accessible is distributed renewable energy technologies market is and what is the current attitude towards the market in Africa, both on the public and private fronts?

Dr. Rose Mutiso (RM): Renewable technologies such as solar are mature and costs have dropped significantly. This is not just an environmental consideration, the economic drivers for renewables are also strong as more than two-thirds of Africans lack access to electricity. Renewables will play a major role in closing this energy access gap. In particular, distributed renewable technologies such as off-grid solar and mini-grids will be crucial for reaching the millions of Africans who live in rural areas where conventional grid-extension may not be cost-effective or timely.

The markets for these off-grid technologies are growing, but there is still more to be done in order to give them stronger legitimacy. The International Energy Agency (IEA) estimates that over 60 percent of energy investments need to go towards these solutions, if universal energy access goals are to be met, so we have to embrace them. African governments and global development partners are starting to recognise the role of renewable technologies and distributed solutions, which is a welcome change.

Through the efforts of programs such as International Finance Corporation’s Lighting Africa program, markets for off-grid solar lighting and charging products are growing rapidly. More needs to be done enable these technologies to reach more people and also allow them move up the energy ladder beyond providing electricity. I co-lead the Clean Energy Ministerial Global Lighting and Energy Access Partnership (Global LEAP) initiative, which works with partners across the world to catalyse commercial markets for affordable, high-quality and high-performing clean energy products and services in areas such as sub-Saharan Africa. We just announced a new effort in collaboration with UN Sustainable Energy for All initiative (SE4All) at COP21 known as the Efficiency for Access (E4A) Coalition, which aims to harness energy-efficient technologies to enable delivery of energy services to off-grid populations faster and at the lowest cost.

Meeting the ambitious SDG7 (Sustainable Development Goal 7) targeting universal energy access by 2030, will need a major paradigm shift away from business-as-usual approaches and explore more innovative technologies and service delivery models. Distributed renewable technologies are at the heart of this strategy.

VA: Besides funding, what other technical or operational challenges exist with distributed renewable energy on the continent?

RM: Technologies are largely mature, but more needs to done to bring down costs of some key components such as batteries and end-use technologies. A sound regulatory and policy environment is also needed. Off-grid energy companies face many challenges in attracting private investment due to the high risks, both real and perceived, so the public sector actors need to step in to help de-risk these investments.

Companies are still experimenting with different business models and some sectors, such as mini-grids, are yet to see some really successful examples, so we need more resources to enable experimentation and risk-taking in this sector.

Do you think that Africa is capable of building infrastructure to support distributed and/or renewable energy generation, as well as their necessary technologies?

Yes, as long as we have a stronger political ‘buy-in’, prioritisation of distributed renewables as an important part of the energy mix, enabling policies and regulatory frameworks and mobilization of substantial public and private sector finance. Developed countries need to play a stronger role in support of Africa as it undertakes this task of working towards universal electrification in a way that side-steps the many pitfalls of the mainstream approaches to electrification such as environmental degradation. This is a great opportunity for the whole world to learn from Africa’s experience in a massive roll-out of renewable and distributed technologies and there is also a huge opportunity for Africa here by bypassing some of the challenges of dealing with legacy infrastructure that other countries face.

Source: Ventures Africa