Experts discuss financing options like results-based financing, loans, equity, and debt in the off-grid solar industry. D-Lite's journey from solar lanterns to home systems, Nithio's financing model for off-grid solar in Africa, and the importance of subsidies and local capital. Challenges in scaling mini grids in Africa and potential shift of solar panel manufacturing to Africa.
Scaling up debt capital is vital for financing energy access, with concessional capital still heavily relied upon.
Capacity development and local project developers' training are crucial for efficient deployment of renewable energy technologies.
Promoting local manufacturing of solar components faces challenges balancing quality and affordability for customers, despite efforts to incentivize production in certain regions.
Deep dives
Challenges and Solutions in Financing Energy Access
One of the main challenges in financing energy access is the need for scaling up debt capital through securitization structures or off-balance sheet structures. While progress has been made, the industry still heavily relies on concessional capital from development agencies, with limited commercial investment. Addressing capacity development and local project developers' training is crucial for efficient deployment of renewable energy technologies. Productive energy use is highlighted as a key aspect, aiming to empower end-users economically.
The Implications of Achieving SDG7 and Beyond
Achieving SDG7, which focuses on providing minimum tier one energy access to all, is seen as a necessary milestone but not sufficient. Panelists acknowledge that meeting SDG7 targets in every country, especially those facing challenges like conflict or low market density, may not be feasible by 2030. The need for robust project financing, especially for mini-grid systems, is crucial for accelerated electrification and economic development.
Local Manufacturing and Supply Chain Dynamics
The discussion around local manufacturing of solar components highlights the dominance of Chinese suppliers due to cost efficiency and production ecosystem. Efforts to promote local manufacturing, particularly in Nigeria, are emerging, spurred by incentives and policies. While opportunities exist to localize manufacturing in certain regions, the value-for-money proposition for customers remains a key consideration, emphasizing quality and affordability of solar products.
Future Perspectives on Energy Access and Community Resilience
Future strategies for advancing community resilience in energy access emphasize the importance of productive energy use and economic development initiatives. Training local communities, enhancing local production capacity, and incentivizing efficient financing models are essential components for sustainable energy access. While challenges persist in achieving universal electrification, a collective approach focusing on technology, policy, and financial solutions is fundamental for long-term success.
Shifts in the Manufacturing Landscape
Discussions around shifting solar equipment manufacturing from China to local regions underscore the complexities of global supply chains and cost competitiveness. While initiatives in countries like Nigeria and India aim to promote local production, the challenge lies in balancing quality and affordability for end-users. Despite strides towards local manufacturing, the established value chain and technology advancements in countries like China present ongoing hurdles in replicating similar integrated solutions in other regions.
In this episode, we speak with six panellists working in energy access: Amaury Fastenakels: Chief Marketing Officer, BBOXX, Michael Sudarkasa: Chief Executive Officer, Africa Business Group, Karl Skare: Managing Director of Global Partnerships and Strategy, d.light, Raghav Sachdeva: Chief Investment Officer, Nithio, and Emily McAteer: Founder & CEO, Odyssey Energy Solutions.
We discuss options to finance energy access in emerging markets, ranging from equity, debt, special purpose vehicles, results based financing and much more.
This episode was part of the Ross Energy Week event in 2021.
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