The International Solar Alliance has initiated formal consultations with Africa50, a pan-African infrastructure investor, to manage the proposed Africa Solar Facility-a $200 million fund created to accelerate investment in distributed solar projects throughout Africa. This forms part of ISA’s greater initiative to accelerate clean energy access for sustainable development within the continent.
Increasing Solar Investments in Africa
The only pan-African pure-play solar yield fund in development, the ASF is purposed to address the particular challenges facing universal solar energy deployment on the continent. While much-needed, clean energy in Africa has seen an underserved supply in the market due to many barriers to entry for solar energy. Smaller project sizes and perceived high risks have generally held back investments from truly taking off.
With the ASF, ISA intends to offer tailored, affordable financing schemes that can overcome these obstacles and unlock significant investment in solar projects. The ASF will also be instrumental in realizing energy access throughout Africa, especially to the most remote and underserved regions, given its emphasis on smaller, distributed solar installations.
Public Expression of Interest Process at ISA
This decision follows the public expression of interest, or EOI, process initiated by ISA earlier this year to identify a suitable investment manager with the capability to effectively manage the ASF and ensure that the latter is able to meet its ambitious goals.
ISA Director-General Ajay Mathur said he was very confident that Africa50 would form a perfect partnership for the ASF because of its enormous experience in investing in infrastructure and developing projects across the continent. With its mandate to mobilize public and private sector resources, Africa50 is well placed to manage the solar facility.
We are partnering with Africa50 to implement the first regional fund in Africa under ISA’s flagship private sector program, the Global Solar Facility,” Mathur said. “We look forward to building the facility with Africa50 and contributing to clean electricity for 600 million people in Africa.”
Role of Africa50 and Expertise
With a portfolio of over $8 billion and having mobilized in excess of $4 billion of external funding for projects across the continent, Africa50 is a premier player in African infrastructure development. Supported by 32 African countries, the African Development Bank, and two African central banks, Africa50 brings broad project development capabilities, experience, and a strong track record in delivering infrastructure projects.
This makes the partnership between ISA and Africa50 a special synergy of strengths from both the public and private sector. Given that it has the capacity to bring in both public resources and private sector agility, Africa50 will be an ideal candidate to manage the ASF, and discussions to formalize this partnership are underway.
Africa Solar Facility: Scaling Up Energy Access
The African Solar Facility is going to be one of the major players in the improving access to energy across the continent. In view of the more than 600 million lacking access to electricity in Africa, the need for reliable and sustainable energy solutions has never been so great. ASF will be for distributed solar projects that can help make scalable and affordable energy solutions to regions currently underserved by traditional energy infrastructure.
Generally, the Distributed Solar Systems are small- to medium-scale installations that avail several advantages to the rural and remote community level. Relatively quick deployment and lower costs in comparison to large-scale power plants make it an ideal solution for expanding energy access in Africa.
Global Solar Facility
The ASF is the first regional undertaking of ISA’s Global Solar Facility-innovative financial solutions for distributed solar projects across the world-a flagship programme. The GSF forms a part of ISA’s commitment to support 119 countries, members, and signatories in achieving their desired carbon-neutral futures using the sun.
It invests in funds that are focused on specific areas, such as the ASF, so it can unlock investment for clean energy projects not otherwise possible. Besides providing the capital, it reduces the risk of solar investments, making the projects more viable for investors.
Africa’s Solar Potential
Most regions in the African continent receive some of the highest solar radiation in the world; thus, Africa has immense potential for the development of solar energy. Despite this natural advantage, solar energy is still a tiny fraction of the energy mix on the continent. The ASF was therefore targeting projects that would help the African countries tap into their solar potential, given their dependence on fossil fuel.
It is also critical for the expansion of solar energy in Africa, particularly in the context of reaching broader development objectives: a way to ensure access to reliable electricity, which in turn spurs economic growth and improvements in healthcare and education. This will help the ASF create new opportunities for economic growth while addressing an urgent need: lowering greenhouse gas emissions.
Next Steps for the ASF
Meanwhile, talks between ISA and Africa50 are in their final stages, and if successful, the organisation would appoint Africa50 as an investment manager for the ASF. If sealed, this agreement would permit the rapid mobilization of solar projects across Africa-a great boost to the continent’s Clean Energy Transition.
The launch of the ASF also underlines the commitment by ISA to work with the public and private sectors to provide sustainable energy solutions. With Africa50 and a connected network of investors in its corner, the ASF is sure to become a driving force behind the development of solar energy in Africa.
Source: International Solar Alliance (ISA)