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Africa’s distributed energy resources dominated by overseas players

A briefing released by Oil Change International details how the growth of distributed renewable energy in Africa has so far failed to include locally-owned companies and initiatives.

The Distributed Funds for Distributed Renewable Energy briefing by the advocacy organisation highlights the need for public finance institutions to prioritise local ownership of off-grid and mini-grid renewable energy initiatives.

The distributed energy resources sector has been growing rapidly since 2013 – especially for companies focused on pay-as-you-go solar home systems — but finance has overwhelmingly only been accessible for multinational companies.

These corporates are based in Europe or North America or led by entrepreneurs from these regions, meaning profits are largely not remaining in Africa.

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“As governments and public finance institutions around the world prepare historic stimulus packages in response to COVID-19, we have an important opportunity to grow distributed renewable energy in Africa,” said Thuli Makama, senior advisor at Oil Change International.

Makama added: “But we need this funding to help start locally owned renewable energy initiatives instead of just flowing to a handful of overseas companies.”

International public finance

The briefing also includes data showing international public finance for projects in Africa has overall been dramatically misaligned with energy access and climate change priorities.

Only about 1-2% of international public finance for energy has gone to energy access for distributed renewable energy since 2014, and fossil fuels received more than 3.5 times the support than all kinds of renewable energy did from 2016 to 2018.

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Distributed energy resources market

Bronwen Tucker, research analyst at Oil Change International, said: “Mini-grid and off-grid renewable energy is more cost-effective and resilient than both grid-based renewable energy and off-grid fossil fuels.”

Tucker continued: “Growing a locally owned distributed renewable energy economy is more important than ever. The pandemic has laid bare the need to build energy systems that are resilient to future crises, including the global market shocks and natural disasters we can expect to see intensify as climate impacts escalate.”

Three recommendations

The briefing echos long-standing calls for international public finance institutions (like multilateral development banks and development finance institutions) to stop funding fossils and invest in renewables for energy access.

The document also outlines three new areas of recommendations for how these institutions can support the growth of locally owned initiatives:

  1. Supporting the entry of local financial institutions into the distributed renewable energy sector,
  2. Facilitating coordination, research and planning between international public finance institutions, local banks, and distributed renewable energy providers, and
  3. Increasing overall support for distributed renewable energy, with an emphasis on community-owned and cooperative models.

Oil Change International is a research, communication, and advocacy organisation focused on exposing the true costs of fossil fuels and facilitating the coming transition towards clean energy.

Read the Distributed Funds for Distributed Renewable Energy briefing.

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.