Record $2.8 billion spent on sub-Saharan African renewables projects in 2018

A new report by BloombergNEF (BNEF) has found that US$2.8 billion was spent on renewables projects in sub-Saharan Africa (excluding South Africa) in 2018, setting a record at some $600 million more than the previous year.

BNEF’s Sub-Saharan Africa Market Outlook highlighted how investors are looking to build projects away from mature African markets, with 1.2GW of solar PV outside of South Africa expected to come online in 2021 – more than twice the amount commissioned in 2018.

Country-level renewable energy targets and incentives are backed by assistance from multilaterals, which remain a key source of finance and have helped roll out auction programmes, according to BNEF, citing the World Bank’s ‘Scaling Solar’ programme.

The programme awarded just under 400MW of solar PV capacity over 2015-18, equivalent to 39% of the total installed outside of South Africa over the same period. Such auctions have yielded some of the world’s lowest bid prices for solar power, with several projects winning capacity at under $0.04 per KWh.

However, BNEF noted that such auctions are ‘double-edged’ in the sense that many are bundled with features designed to reduce project costs and risk. “That helps lower prices, but can also lead to government expecting to procure power at the same rates for projects that are not backed by such frameworks,” said BNEF analyst Antoine Vagneur-Jones.