On the margins of the United Nations Climate Action Summit convened by the Secretary-General, H.E. Mr Antonio Guterres to drum up support for climate action, a group of like-minded countries, financiers, project developers and the United Nations Economic Commission for Africa (ECA) launched on Monday an initiative to energize climate resilient development in Africa faster, better and cleaner with deployment of 10,000 MW by 2025
The SDG7 Initiative for Africa is aimed at crowding in private sector finance for accelerated clean energy deployment to address Africa’s increasing need for energy, while contributing to climate action through more ambitious nationally determined contributions to climate action (NDCs) under the Paris Agreement. It was launched by ECA with support from DBSA, Africa50, Angola, Namibia and Senegal, among others.
The initiative is a contribution to the call by the UN Secretary-General for various stakeholders to come to his Climate Action Summit of 23 September 2019 with concrete proposals to raise climate action ambition. The Economic Commission for Africa has conceived the SDG7 Initiative for Africa to bring together like-minded group of countries, financiers, and project developers to combine scale, speed and sustainability to crowd-in financing from the private sector to address Africa’s increasing energy needs and contribute to climate action, and also facilitate investments in transmission and distribution infrastructure to link up Africa’s power pools and create a power market to attract investments, supported by regional banks such as DBSA, Africa50 and many others.
Energy demand in Africa is increasing due to various factors, including population growth, a growing middle class, industrialization, trade, urbanization and climate change. “The current level of private sector engagement in the energy sector in Africa is still very small given the market size, although there have been some significant developments in Ethiopia, Kenya, Morocco, Namibia, Egypt, Senegal, South Africa and Zambia, among others”, said Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa.
“Africa has abundance of various forms of renewable energy resources, including solar, hydro, wind and geothermal. Our countries need the investments to tap these resources for social and economic development on the continent in line with national development plans and attainment of the aspirations of the African Union’s Agenda 2063 and the UN 2030 Agenda for Sustainable Development”, Songwe said.
H.E. President João Lourenço of Angola in his interventions accepting to champion the initiative, welcomed and lauded the efforts of the partners to the initiative, noting its innovation and key impact in bringing in much needed private sector finance to support African countries with their energy and climate aspirations while relieving governments from the burden of prioritizing limited public resources for competing needs.
Africa50 CEO, Alain Ebobissé said “Africa50 is pleased to support the SDG7 initiative. Utilizing the asset-recycling model, private capital and development financing can refinance existing renewable energy assets currently owned by African governments. This will free up their capital for reinvestment into new greenfield renewable energy projects. This model can have a catalytic effect on improving sustainable, climate friendly energy access across the continent. Africa needs this now and working together we can make it happen.”
Favourable factors align to make the investment case for tapping this potential of Africa’s renewable energy potential, including: low interest rates and availability of capital globally; a history of good returns on investment from projects in Africa; high potential for energy trade; and Africa remains the only region in the world for transformative clean energy deployment. But blueprint is needed for tapping institutional investors’ financing to transform Africa’s energy future. The initiative aims to do this by addressing a number of issues, including issues of poor governance and weak institutions, lack of enabling policies and regulatory frameworks, poor management and lack of transparency in energy procurement, low bankability of project off-takers as well as limited enforcement of contracts, quality standards and certification.
The initiative will leverage on world renowned expertise of financiers, project developers, regional development banks and financial institutions such as DBSA and Africa50, national sovereign funds such as the Nigerian Sovereign Investment Authority, and leading national renewable energy companies, among others. The first milestone for the initiative is to achieve 10,000 MW of clean energy deployment by 2025.