A new report, released by RES4Africa in partnership with UNECA, is a methodological framework to analyse the policy and regulatory environment of African electricity markets in their preparedness to attract private sector investors.
In the global context of $1.9 trillion energy sector investments, of which emerging and developing countries only attract one fifth, and an even smaller fraction in Africa, it is crucial to address private sector investment participation barriers by addressing key regulatory challenges.
In the context of Africa, with 590 million people without access to electricity, with 13 million more losing access in 2019-2020 due to the effects of COVID-19, with 24 African countries having access levels below 50% and with 31% of primary schools and comparable level of health facilities lacking access, accelerating private sector investment remains crucial.
The report will support the implementation of the United Nations High-Level Dialogue on Energy (HLDE) recommendations on regulation and scaled private sector investment. Released last week, in the light of the UN HLDE, the methodology relates to the openness, attractiveness and readiness of the regulatory environment for private sector scaled investment participation across the electricity value chain in Africa.
The report is in line with the key recommendation of the UN HLDE, which is taking place on the theme of “accelerating action to achieve SDG7 in support of the 2030 Agenda and the Paris Agreement”. The HLDE considered recommendations under key thematic areas of energy access, energy transition, enabling SDGs through inclusive and just energy transition, innovation, technology and data, and finance and investment. Heads of State came together to launch compacts and actions for clean and affordable energy for all within the Decade of Action.
The HLDE calls for a robust private sector participation in energy infrastructure investment across the value chain by addressing uncertainties in policy and regulatory environments. In this regard, the HLDE endorses numerous recommendations, including the de-risking of projects and fixing regulatory barriers to ensure market openness, attractiveness and readiness for private-sector finance.
In the remaining years of the Decade of Action, Africa must accelerate action to meet SDG7 goals, and enable a just energy transition to a clean and sustainable energy future for all. In this effort, and in support of the implementation of the recommendations of the HLDE related to electricity market regulation and governance to crowd-in scaled private sector investment, UNECA and RES4Africa have engaged 17 African countries towards assessment of the regulatory environment to support improvements and reforms. The report sheds light on the methodological approach adopted in this effort.
As African countries pursue greater openness, attractiveness and readiness of their electricity markets for greater investment, this regulatory review methodology may offer a useful guide in supporting countries identifying areas of strength and regulatory gaps to address towards a conducive environment for accelerated action to meet SDG7 goals.
Access the full report here.