Off-Grid, Captive Power Solutions Sustain Investment In Africa's Energy Sector

With recent reports estimating that six hundred million people are without access to electricity in sub-Saharan Africa, significant and sustained investment is required across Africa’s entire energy generation and supply value chain.

The trend is clear.

As the size and number of large government-funded and implemented non-renewable power projects in Africa has decreased there has been an uptick in smaller mixed public-private (or entirely private) off-grid power projects with rational, local end-user funding.

While large utility-owned non-renewable projects will remain an important part of the energy value chain, off-grid offers a faster way to close Africa’s power gap.

Renewables – especially privately or partially privately-funded new off-grid and captive power solutions - are set to sustain and expand investment while increasing affordability and access to electricity in Africa’s rapidly evolving energy landscape.

“As such, looking ahead, most of the growth in terms of households covered by off-grid power solutions could come from service-platform developers able to leverage strong distribution platforms,” says van Tonder.
Off-grid strategy

Developing this diverse energy supply and generation mix will require an equally diverse funding mix if it is to be sustainable.

The global trend towards public private partnerships (PPPs) is currently playing out across the African continent. While non-cost reflective tariffs in some countries make PPP financing solutions more challenging, recent moves towards cost-reflective tariffs in Mozambique, Ghana and Zambia facilitate the relevance of PPPs as a viable funding model – providing the potential to further improve the electrification rates across Africa.

Adding localised privately funded and user-pay solutions to the national grid or allowing entirely independent off-grid solutions to take pressure off the grid, “provides debt-stressed African sovereigns with a way of funding the development of power projects - by moving substantial investment off government balance sheets,” explains van Tonder.

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