By Tsitsi Musasike, Jiaqi Lu, Adjeikai Adjei, Kudakwashe Ndhlukula, Eugenia Masvikeni, Kevin P. Gallagher and Maipelo Stroh
The 2024-2025 policy calendar reveals key opportunities for African countries and international stakeholders to address key challenges that are hampering the expansion of renewable energy and energy access across the continent.
Prominently, this includes the Forum on China-Africa Cooperation (FOCAC) in September, followed by South Africa assuming the helm of the Group of 20 (G20) and hosting the G20 Summit in 2025. Both events come at a time when world leaders have recommitted to the Paris Agreement and to triple investment in renewable energy to avert crossing over a climate change cliff in 2030.
Sub-Saharan Africa’s contribution to new generation capacity is 260 gigawatts (GW), i.e., six times the region’s current generation capacity of 40GW. The Southern African Development Community’s (SADC) share of this envisaged growth for sub-Saharan Africa is 52.8GW required for universal energy access and 53 percent renewables in the energy mix by 2040.
The SADC region has one of the highest solar and great wind energy potential in sub-Saharan Africa. The falling costs of both solar photovoltaic (PV) and wind energy technologies and the discovery of transition minerals essential for the shift to low-carbon economies in several SADC countries makes the region a favorable destination for renewable energy project developers. Yet only 1 percent of solar and wind energy potential in SADC countries has been tapped to date.
Achieving this mammoth task for sub-Saharan Africa and the SADC region demands a pipeline of well-prepared and bankable projects, a development that will require significant scaling up of both financial resources and skills.
Structures and policies to promote investment in renewable energy in the SADC region already exist. Sufficient concessionary funding is available at the investment level. Despite the abundant renewable energy sources and supporting structural frameworks, the total contribution of solar and wind energy is low in most SADC countries. One of the reasons for this is the slow pace at which projects are being developed for bankability.
A new report by the Boston University Global Development Policy Center, the SADC Development Finance Resource Centre and the SADC Centre for Renewable Energy and Energy Efficiency highlights the importance of prefeasibility project preparation facilities for expanding renewable energy and energy access in the SADC region.
The report highlights the inadequacy of regional and global early-stage or prefeasibility project preparation facilities for expanding renewable energy and energy access in the SADC region. These prefeasibility facilities could play a key role in unlocking the 52.8GW required to achieve universal energy access and 53 percent of renewables in the SADC energy mix by 2040.
The key finding of the report is that the existing SADC regional and international prefeasibility facilities are inadequate and unstructured for supporting project developers during the early stages of project development. In particular, only seven out of 41 SADC development finance institutions (DFIs) have an infrastructure mandate and provide project preparation facilities. There are only three cross-border regional project preparation facilities that serve the 16 SADC member states, namely the Development Bank of Southern Africa’s Project Preparation Facility (DBSA PPF), the DBSA managed SADC Project Preparation Development Facility (SADC PPDF) and the Southern African Power Pool (SAPP) Project Advisory Unit’s (PAU) Project Preparation Fund. Of these, only the SAPP PAU’s Project Preparation Fund is dedicated for the energy sector projects. The SADC region does not have a project preparation facility dedicated for renewable energy and/or energy efficiency. This means that renewable energy projects must compete with other energy subsectors such as transmission, or other infrastructure sectors.
We also found that the main frustration for local project developers is that the approval processes are prohibitively long (despite the small funding amount required at the early stages of project development), unstandardized and that financial institutions often prefer to deal with experienced developers with a large pipeline of projects. For their part, lenders highlighted that local developers lack the capacity, skills and know-how to develop projects and need support in the early stages of project development.
We make the following policy recommendations to help address the challenges highlighted by both financial institutions and developers: restructuring existing project preparation facilities to maximize support to local project developers and reduce access barriers by shortening and simplifying the approval processes. Scaling up existing regional project preparation facilities and international partnerships and ring-fencing a portion of the funding for renewable energy prefeasibility studies will increase available funding.
SADC member states should also consider exploring new prefeasibility facilities to generate project pipeline across all member states and potentially with international funding partnerships such as the World Bank, European Union and Green Investment Finance Partnership (GIFP). More regional technical assistance facilities are needed to support SADC DFIs and new entrants into the market (particularly small- and medium-size developers). The FOCAC and G20 Summit can be leveraged to achieve these policy objectives.
China can play a major role in developing the institutional capacity for prefeasibility facilities. The continent’s commitment to scale up renewable energy is aligned with China’s green development partnership under the Belt and Road Initiative (BRI) and the GIFP, which was unveiled at the BRI Forum which marked the 10th anniversary of the BRI in October 2023. The GIFP’s priority areas are green infrastructure, green energy and green finance. Although still to be unpacked, the GIFP promises to be a new platform to help BRI partner countries develop green projects by providing financing for feasibility studies, technical support, risk analysis, debt sustainable analysis and proposal design to generate a green project pipeline.
Tripling investment in renewables requires $12 trillion. The G20 countries have committed to accelerating this growth. South Africa, a member of SADC, as host country of the G20 Summit in 2025, is poised to attract funding, from G20 members and philanthropic organizations from G20 countries. The 2025 summit is a perfect opportunity for the SADC region to mobilize project preparation funding to help unlock the pipeline of projects required for the envisaged 52.8GW of renewables by 2040.
Adequate, affordable and easily accessible prefeasibility facilities and improved technical skills will go a long way towards meeting the SADC region’s 2040 target of universal energy access and 53 percent renewables in the energy mix.
Given the slate of upcoming policy opportunities and the renewable energy potential waiting to be tapped in SADC countries, the future looks bright.
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KudakwasheNdhlukulais the Executive Director of the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE), a subsidiary organization of the Southern African Development Community (SADC) with a mandate to promote renewable energy efficiency across the member states.
Eugenia Masvikeni is a Renewable Energy Expert atthe SADC Centre for Renewable Energy and Energy Efficiency (SACREEE), a subsidiary organization of the Southern African Development Community (SADC) with a mandate to promote renewable energy efficiency across the member states.
Maipelo Stroh is a Senior Capacity Building Officer with the SADC Development Finance Resource Centre.
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