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AFSIA report dissects why African solar sector is growing

AFSIA report dissects why African solar sector is growing


The Africa Solar Industry Association (AFSIA) has released its first annual Africa Solar Outlook.

The report is a country-by-country review of the key drivers of successful solar development. It aims to provide solar decision-makers with clear and concise information about solar dynamics in each country in Africa.

In addition to country vignettes, the report looks at some of the main segment of the solar industry such as large-scale projects, the commercial and industrial sector, minigrids and solar home systems.

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Johan van Zuylen, AFSIA CEO: “We are entering a decade of wonderful prospects for solar in Africa, a decade in which solar professionals are in a position to achieve universal electrification targets across the continent, thereby impacting the living conditions of 600 million people, and boost the continental economy by providing better and cheaper electricity to the companies and industries that have been asking for it for so long. This decade has already started and it promises to be a wonderful journey for the African solar industry.

The country snapshots link back to interactive maps on the AFSIA website – these draw on 2019 data from IRENA and continual AFSIA research.

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Large-scale energy projects are changing the world
The report points out that 37 countries in the world have joined the Gigawatt Club (installed more than 1GW of solar energy) but only two of those are in Africa, namely South Africa and Egypt. It posits that nine African countries could soon join the club, based on announcements by governments and private developers.

While Algeria and Morocco could be the first two to reach this goal, there are some surprises on the “bubbling under” list such as Zimbabwe, Zambia, DRC, Angola, Namibia, Ethiopia and Botswana. These are due to a mix of private players charting their own course and governments inviting private developers to pursue direct contracts.

Two positive trends in the global solar market will have particular effects on the African energy sector. Coupling storage technology with solar developments bypasses the limitation of solar energy which can only be used during the daytime. The report points out West Africa is leading the charge in large-scale solar plus energy storage projects.

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The other noticeable trend is the promise of hydrogen. “Africa is ideally positioned thanks to its excellent irradiation to play a pivotal role in the global hydrogen market and also to have its local industry grow and develop on the backbone of a stable and local energy resource. All global energy leaders, and by extension solar companies, are already eyeing privileged partnerships in Africa’s sunniest regions,” reads the report.

C&I in solar market is booming
While large scale solar projects have dominated the sector over the past few years, the commercial and industrial sector is booming. “Based on data collected by AFSIA, C&I could indeed represent 30-40% of all solar capacities installed in the coming years.

So far we have identified more than 6,200 largescale, C&I and mini-grid project across the continent. Out of these 6,200, 2,400 are already in operation and are composed by C&I projects for more than 80%.”

Three factors influence the exponential growth.

Firstly, more and more C&I end-users are now fully understanding the benefits of going solar.

Secondly, up to now the majority of solar C&I projects have been delivered on a CAPIX basis, meaning the end-user had to pay the full amount upfront for the solar installation. This limited the number of projects that got off the ground since only a small percentage of companies have the required cash to purchase 25 years’ worth of solar electricity in one go. The international investment community has seen this as an opportunity and developed a growing appetite for innovative investment in this sector.

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Thirdly, African C&I projects are considered attractive investment opportunities because they are based on business to business negotiations which can be conducted and successfully closed faster than lengthy government tenders. They can also offer interesting internal rates of return, as opposed to international tenders for large-scale projects where the international competition pushes this rate of return expectation to the lowest limit.

Source: esi-africa
Anand Gupta Editor - EQ Int'l Media Network