Investment opportunities in Africa's renewable energy sector

Investment in Africa's renewable energy sector presents both significant opportunities and challenges. With a projected need for $30 billion in initial financing to unlock over $70 billion for electrification by 2030, the sector's growth potential is substantial. CNBC Africa's Tabitha Muthoni spoke to Joseph Ng'ang'a, Vice President for Africa at the Global Energy Alliance for People and Planet (GEAPP) for more on this. Different countries in Africa have varying approaches to providing frameworks for investing in the renewable energy space. For example, South Africa has a successful auction system for wind and solar projects, providing investors with a predictable process for assessing opportunities and making significant investments in infrastructure. However, in other countries on the continent, challenges arise due to factors like country size, GDP, and borrowing capacity. Organizations like GEAPP are working to support these countries in developing policies that are investor-friendly. Addressing the issue of financially unstable utilities, Ng'ang'a emphasized the importance of governments providing support to utilities to give investors confidence in long-term investments. Strategies like guarantees can help manage risk associated with off-takers who are typically financially unstable. When considering risks associated with investing in Africa's renewable energy sector, Ng'ang'a highlighted concerns like the size of investments being relatively small in many countries, local currency depreciation impacting returns, and long-term political risk. To mitigate these risks, initiatives like supporting local companies to develop bankable projects, partnering with organizations to de-risk investments in local currency, and providing political risk guarantees are crucial. Public-private partnerships are essential, with initiatives like Mission 300, led by the World Bank and AFDB committing $30 billion to electrify 300 million Africans. Collaboration between various partners is vital to unlock the required funds for electrification on the continent. Promoting local content development and fostering mutually beneficial partnerships with stakeholders is key to driving renewable energy projects. Ensuring that local developers lead project development reduces costs and risks, making investments more attractive to both local and international investors. By supporting local developers in preparing projects for investment, initiatives like Sustainable Energy for All are working towards making renewable energy projects more efficient and cost-effective in Africa, ultimately benefiting consumers and the continent's sustainable energy future.