These funds essentially create the confidence needed for early stage technology development and deployment financing and also facilitate a structure for public-private partnerships.
New analysis from Frost & Sullivan, Financing Clean Energy Projects in Sub-Saharan Africa, finds that the sub-Saharan African market for clean energy projects has more than $200.00 million in financing available from private investors. The clean energy technologies covered in this study are solar energy, wind energy, biomass power, and small hydropower projects.
"In spite of its potential, the sub-Saharan Africa region is yet to fully realise the significant prospects to develop renewable energy projects," says Frost & Sullivan Programme Manager, Cornelis Van der Waal. "The lack of suitable financing has been one of the key reasons for the slow progress in the development of the region’s renewable energy projects. However, policies and regulations that enhance public and private sector financing assist in shifting some of the investment costs away from the investor to the public sector."
The key challenges to the financing of renewable energy projects in sub-Saharan Africa countries are a lack of clarity on targets for renewable energy projects, an underdeveloped policy and regulatory environment and a dearth of funding for suitable projects.
"Despite the fact that global private equity (PE) and venture capital (VC) investment grew in 2008, PE investment remains a relatively new asset class," explains Van der Waal. "Even in countries where investors are comfortable with PE investments, sustainable investments are unfamiliar, creating an additional challenge for renewable energy companies seeking to raise finance."
A combination of private sector investment and government funding will be the key to ensuring that sufficient capital is available for the financing of renewable energy projects.
"Governments should use instruments such as subsidies, tax measures, feed-in or quota schemes to lower investment costs," concludes Van der Waal.
Financing Clean Energy Projects in Sub-Saharan Africa is part of the Energy & Power Growth Partnership Services programme, which also includes research in the following markets: Southern African Renewable Energy Equipment Markets, African Wind Power Market, and Strategic Growth Plans of Major Power Utilities in Sub Saharan Africa. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.