Launch of Financing Renewable Energy in Developing Countries: Drivers and Barriers for Private Finance in sub-Saharan Africa

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21 February 2012 | Nairobi, Kenya

Smart public policies are key to powering up sub-Saharan’s Africa’s clean energy potential, said the head of UNEP Achim Steiner while unveiling UNEP Finance Initiative’s latest report in Nairobi. In doing so, millions can be lifted out of poverty and the sustainable development potential of the continent far sooner realized, says the report, which was released at UNEP headquarters in Nairobi, Kenya, to mark the Africa launch of the United Nations 2012 International Year of Sustainable Energy for All. This UN-system-wide initiative aims to bring about concrete action to achieve universal access to modern energy services and double both the rate of improvement in energy efficiency and the share of renewable energy in the global mix by 2030. Experts estimate that unless stronger commitments are made to reverse current trends, half the population in sub-Saharan Africa will still be without electricity by 2030, and the proportion of the population relying on traditional fuels for household energy needs will remain the highest among all world regions. Such a scenario would severely hamper efforts to achieve the Millennium Development Goals. The report from UNEP FI, entitled Financing Renewable Energy in Developing Countries: Drivers and Barriers for Private Finance in sub-Saharan Africa, outlines how current obstacles to the scaling-up of sustainable energy solutions in Africa – such as the cost of electricity generation or difficult grid access – can be tackled. To meet the continent’s growing energy demands, the power sector in Africa needs to install an estimated 7,000 megawatts (MW) of new generation capacity each year. The UNEP report argues that much of this can come from Africa’s wealth of untapped, domestic renewable resources. Cape Verde, Kenya, Madagascar, Sudan and Chad have particularly significant potential, says the study. According to the African Development Bank Group, Mauritania’s wind energy potential is almost four times its annual energy need, while Sudan’s is equivalent to 90 per cent of its annual energy needs. This offers both opportunities to improve energy security and create regional markets. “Accelerating and scaling-up sustainable energy for all will be key to realizing a transition to a low carbon, resource efficient ‘inclusive’ Green Economy”, said UN Under-Secretary-General and UNEP Executive Director Achim Steiner. “Some 1.3 billion people worldwide have no access to electricity and 95 per cent of those live in Africa. Yet the Continent has abundant renewable resources that, with the right kind of public policies in place, can unlock a new development future and light up the lives and the livelihoods of millions of people,” he said. “In four short months, world leaders meet at the Rio+20 summit in Brazil. Access to sustainable energy should be upper most in delegates minds as should the current barriers—ranging from fossil fuel subsidies to the need for up front financing—that to date have held back this massive potential in Africa and elsewhere,” said Mr Steiner. The UNEP report is based on a survey of 38 institutions, mostly from the private sector, which are all involved in energy infrastructure finance in developing countries.