A stable regulatory environment is essential in reducing capital costs for renewable energy investments in Africa, WindEurope CEO Giles Dickson told an Africa-EU Summit in Milan today.
Dickson said: “The cost of capital is the largest share of total costs when investing in renewable energy projects in Africa. With long-term visions for the wind energy industry in African countries, those capital costs can be significantly reduced.”
In addition to policy clarity, Dickson urged the EU to start underwriting Power Purchase Agreements (PPAs) in developing countries in a similar way to the US and World Bank. “We can also reduce development risk through simple and transparent permitting,” Dickson said, adding that “ensuring effective supply chains, skills and capacity for operation and maintenance will also contribute to this mitigation.”
He noted that public financing can be used to lower risks to the private sector. The EU had made a similar move with its €25 million investment from the EU/Africa Trust Fund in the Lake Turkana project in Kenya.