On Wednesday, Norwegian state-owned development fund Norfund announced it intends to triple its power sector investments within Sub-Saharan Africa by 2020, Reuters reported.
Norfund is involved in developing hydropower in the Sub-Saharan region together with Norwegian power firm Statkraft and the UK development fund CDC to invest in Globeleq Africa, which intends to install an additional 5,000MW into Sub-Saharan Africa’s energy pool.
Reuters reported that to date Norfund has invested an estimated $248.85 million in Africa’s power sector with the bulk invested in the Sub-Saharan region and the fund is looking to partner with private entities such as Kenya‘s 310MW Lake Turkana wind power park.
“The project is on track to start producing power in 2016, and it should become a showcase for wind power in Africa,” Mugo Kibati, a chairman of the project company told Reuters.
Power project funding
Commenting on Norfund’s development remit, managing director Kjell Roland said: “It is an urgent need in Sub-Saharan Africa for long-term capital investment in infrastructure. There is also a need for dedicated apparatus that help reduce the risks associated with the long investment horizon in energy developments.”
“Nearly 80% of all proposed energy projects are abandoned at an early stage due to a magnitude of reasons. It is almost only investors like Norfund with a development mandate, which are willing to invest in early phases of projects. Amongst the private investors, KLP are among the few who also invests in energy for development,” Roland concluded.
Transparency is key for investment
According to a study by multinational management consulting firm McKinsey & Company, regions in Sub-Saharan Africa are looking at an investment of $490 billion in power generation in order to achieve 80% energy access by 2040.
Africa needs a transparent political and regulatory system to encourage foreign investment with cost-reflective tariffs, said Adam Kendall, McKinsey’s head of power and gas in Africa.