The World Bank Group will boost access to modern alternative energy across Africa through a new solar energy scheme. According to the multilateral finance institution, the project will create a viable market for private solar power projects and further help governments increase the supply of energy for millions of consumers across the continent.
“The programme tagged ‘Scaling Solar’ reduces the development time and uncertainty for bidders and investors, while lowering tariffs for utilities, which ultimately benefits consumers,” a statement from the World Bank Group read.
Renewable energy like solar is available in no small measure yet, according to the bank, more than a third of the population still live without electricity. Against this backdrop, the bank set up the initiative with the understanding that large-scale photovoltaic solar power can be quickly and economically developed to increase the supply of electricity to national grids and improve the reliability of power services for households and businesses.
The initiative builds on the World Bank Group’s experience in promoting small and larger-scale solar power development in emerging economies around the world and on South Africa’s successful Renewable Energy Independent Power Producer Program (REIPP).
Commenting on the programme, the Vice President for Global Client Services, International Finance Corporation (IFC), Jean Prosper, said: “The World Bank Group is committed to promoting sustainable universal access to modern energy in Africa, and Scaling Solar is a key step towards attaining this goal by quickly delivering affordable electricity to previously unreached populations, significant progress can be made on other development goals.”
The institution noted that investors developing solar projects in Africa are often deterred by a number of obstacles, including the unique features and structures of the different markets, high transaction costs, heavily negotiated agreements, and high perceived risk and cost of capital. This is why the region continues to struggle with slow, relatively expensive and ineffective solar development and the consequently restricted access to electricity.
“The countries we work with in Africa to support the development of solar energy look to the World Bank Group for our full suite of services – from technical knowledge and innovation to guarantees and financing. Through Scaling Solar, we are able to respond nimbly and effectively to this growing area of demand,” remarked Anita George, World Bank’s Senior Director for the Energy and Extractives Global Practice.
The bank seeks to alleviate potential investor concerns by structuring the scheme such that it provides a straightforward package to help countries determine the size and location of projects and then auction them competitively to developers. Therefore, the initiative combines World Bank guarantees, Multilateral Investment Guarantee Agency (MIGA) investment guarantees, and international Finance Corporation (IFC) financing to mobilize privately funded solar projects that are connected to the grid.
It also boasts of a simplified process and suite of contract templates which expedites the process in order to enable initial electricity production begin within two years of initiating an engagement.
Commenting on the financial viability of the scheme, Edith Quintrell, MIGA’s Director of Operations, said; “This initiative offers a framework that allows countries to rapidly and efficiently mobilize private capital into solar projects with high development impact without having to start from scratch.” Source: Ventures Africa