On Wednesday, Fieldstone Africa launched an investment index for renewable energy in Africa to assist investors, developers and financial institutions in comparing the relative merit of renewable efforts in different countries.

The independent financial advisor said in a company statement that the ‘Fieldstone Africa Renewables Index (or FARI)’ “is unique among industry measures insofar as it takes into account real world experience as well as the legal, regulatory and technical basis to get things done.”

Fieldstone Africa reports success

Jason Harlan, Chief Executive Officer of Fieldstone Africa, said: “We are proud to introduce an index that is not just a measure of past success, but forms a dynamic measure of how countries are taking steps to encourage and close renewable energy transactions.

“We welcome input from all market participants as we go forward in order to make this an ever more useful tool for the industry.”

The FARI index

The FARI index is a practical investment rating, which grades countries in five categories:

  1. Business context
  2. Political determination
  3. Legal and regulatory infrastructure
  4. Financial context (finance-ability, demand context)
  5. Intangible (which measures the practical experience of converting the possible into the actual)

From all the countries in Africa, the index selects three specific distinctions:

  • The Big Five – where an investment of time and capital in a renewable energy project might most readily be made today;
  • Honourable Mentions – those that merit watching in the near-term for project opportunities and emergence in the Big Five; and
  • Little Gems – smaller economies limited in the scale of potential projects that nonetheless are conducive to successful project development.

The investment firm said that it will update the ranking every four months.

According to the inaugural FARI index, South Africa tops the list in the Big Five category thanks to its sophisticated auction system that has delivered results on a large scale. But the continued risk of a possible ratings downgrade for the country, incumbent utility resistance and complications in closing already awarded projects are problems that might emerge.

Morocco, Uganda and Egypt round out the Big Five. The fifth spot has been left open in this edition of the index as the countries in the top distinction were closely grouped, as were the next tier (Honourable Mention).