Africa needs $ 60 to $ 90 billion to ensure universal access to electricity by 2030, a goal that goes through innovative business models, renewable energy promotion and small-scale projects.

In an interview with Lusa, João Sarmento Cunha, coordinator of renewable energy funds from the African Development Bank (ADB) notes that the electrification of Africa by 2030 is one of the goals more ambitious strategic ADB, requiring a “gigantic” mobilization of resources, and estimates that it will be necessary to spend between $60 and $ 90billion annually.  

“These are not resources that AfDB has, but the ambition is there and the desire to mobilize partners and other investors is very strong,” he said.

While the ADB has traditionally given priority to large projects suchas dams, thermal power plants and other infrastructure that the institution was “well placed to fund”, it is now beginning to support smaller projects such as small grid-connected solar or mini-hydro  plants, which are gaining momentum in Africa, thanks to technological innovations in the solar and digital fields.

Some companies sell their products directly to communities, rather than selling their services through utilities (major providers of essential services such as electricity and water). Solutions typically include small solar panels that can be connected to appliances or mini-grids that are outside the power distribution system but offer a similar or even better (off-grid) experience.

However, they present other challenges, says the ADB official. “We are talking about a segment that should be covered by commercial banks. Hence the need to create an initiative to finance these various business models, a fund that could catalyze and capture financing from other investors, be they donors or commercial investors.

Thus came the Energy Inclusion Fund ( EIF ), a small-scale renewable energy financing platform in Africa , which allows funds to be channeled into these projects and structuring the financing to make them bankable , explained João Sarmento Cunha.

The platform is divided into a fully operational $ 100 million (€ 88 million) capitalization of the Subfund for independent power distribution systems, essentially solar kits (Off-Grid Energy Access Fund or OGEF ); and another subfund to support small-scale and mini-grid (FEI On-Grid) solutions of up to $ 30 million.

The fund manager said this “is a booming market” and expects to raise up to $500 million between 2019 and 2020 in both funds for electrification using renewable energy. One of the exemplary projects is being led by BBoxx in Rwanda, which produces solar kits and uses a digital payment platform where customers can pay in installments via mobile as they consume and can purchase the equipment at the end. .

“These are companies that work as a” micro-utility “, they do not provide a product but a service,” said João Sarmento Cunha.

The project is expected to reach around 80,000 systems and has a funding of $8 million (7.2 million euros) in local currency (Rwandan francs), minimizing the risks of currency devaluation, “very common in Africa“.

The ADB official explained that this is a major problem for companies that sell products and services paid in local currency and face a “very large exchange rate risk” as they can only fund themselves in dollars or euros. “Being able to lend in local currency to mitigate currency risk is one of the innovations of the EIF“, he said.

AfDB is also focused on investment in Lusophone countries, through the so-called Lusophone Compact , an agreement that gives access to financing from the institution, combined with guarantees from the Portuguese Society for Development Financing ( SOFID ). “There is a lot of interest in promoting more investment in these markets.

In the area of energy there is all the work going on in Lusophone countries, including in the areas of technical assistance to prepare projects for bank financing or to support public entities to attract investment in the area of renewables.

João Sarmento Cunha pointed out an “innovative” project of desalination through the energy of the waves on the island of Sao Vicente in Cape Verde, which “could turn out to be a reference in Africa ” as well as a project hydropower in Guinea-Bissau, which will have a installed capacity of 20 MWh (megawatts / hour) and mini-hydro in São Tomé.

In Mozambique, technical assistance programs have been supporting regulatory issues, as well as a wind project, the first to be connected to the grid and integrated into the Mozambican government’s renewable energy promotion strategy.

In Angola a program was recently approved to support capacity building in the area of renewables. 

— Notícias ao Minuto