1、Clean Energy Investment for Development in AfricaStatus and opportunitiesThe IEA examines the full spectrum of energy issues including oil,gas and coal supply and demand,renewable energy technologies,electricity markets,energy efficiency,access to energy,demand side management and much more.Through

2、its work,the IEA advocates policies that will enhance the reliability,affordability and sustainability of energy in its 31 member countries,13 association countries and beyond.This publication and any map included herein are without prejudice to the status of or sovereignty over any territory,to the

3、 delimitation of international frontiers and boundaries and to the name of any territory,city or area.Source:IEA.International Energy Agency Website:www.iea.orgIEA member countries:AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKoreaLithuan

4、iaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandRepublic of TrkiyeUnited KingdomUnited StatesThe European Commission also participates in the work of the IEAIEA association countries:Argentina BrazilChinaEgyptIndiaIndonesiaKenyaMoroccoSenegalSingapore

5、 South Africa Thailand UkraineINTERNATIONAL ENERGYAGENCYClean energy investment for development in Africa Abstract PAGE|3 IEA.CC BY 4.0.Abstract This report on financing clean energy investments in Africa was requested by the Italian presidency of the Group of Seven(G7)to support the presidencys new

6、 Energy for Growth in Africa initiative.This initiative builds upon existing G7 efforts to promote energy and climate investment in Africa and seeks to develop bankable clean energy projects,attract public and private capital,encourage concessional finance,and overcome investment barriers across Afr

7、ica.This report aims to inform the G7 initiative by providing an overview of the energy-related investments needed to achieve all African energy and climate-related goals,including universal energy access and its nationally determined contributions,by 2030.It then explores how clean energy projects

8、can best be financed,focusing on three key investment pillars:household access to modern energy;the electricity sector;and emerging industries.Finally,it identifies the main types of initiatives needed to develop human and institutional skills and capabilities across Africa,without which the financi

9、ng of clean energy will remain a challenge in many countries.With energy vital to Africas long-term prosperity and the need for investment in clean energy technologies in Africa never being more urgent,this report comes at a critical time and lays the foundations for coordinated financing efforts be

10、tween governments of African countries and developed nations,international financial institutions,and development organisations.Clean energy investment for development in Africa Table of contents PAGE|4 IEA.CC BY 4.0.Acknowledgements,contributors and credits This study was prepared by the Directorat

11、e of Sustainability,Technology and Outlooks in cooperation with other directorates and offices of the International Energy Agency(IEA).Daniel Wetzel,Head of the Tracking Sustainable Transitions Unit and Carlo Starace co-ordinated the production of the report.Trevor Morgan provided writing support to

12、 the report and carried editorial responsibility.Key IEA contributors to the report include:Nouhoun Diarra,Darlain Edeme,Emma Gordon,Martin Kueppers,Isabella Notarpietro,Carlo Starace,and Gianluca Tonolo.Sylvia Beyer,Yunyou Chen,Roland Gladushenko,Luca Lo Re,Vera ORiordan and Nikolaos Papastefanakis

13、 provided essential support.Other valuable contributions were made by Araceli Fernandez Pales and Uwe Remme.Erin Crum was the copyeditor.Valuable comments and feedback were provided by other senior management and numerous colleagues within the IEA,in particular,Laura Cozzi.Thanks go to the IEAs Comm

14、unications and Digital Office for their help in producing the report and website materials,particularly Poeli Bojorquez,Curtis Brainard,Astrid Dumond,Liv Gaunt,Grace Gordon,Julia Horowitz,Oliver Joy,Jethro Mullen,Clara Valois and Therese Walsh.The work was commissioned by the 2024 Group of Seven(G7)

15、Presidency of Italy.The work reflects the views of the International Energy Agency Secretariat but does not necessarily reflect those of individual IEA member countries or of any particular funder,supporter,or collaborator.None of the IEA or any funder,supporter or collaborator that contributed to t

16、his work makes any representation or warranty,express or implied,in respect of the works contents(including its completeness or accuracy)and shall not be responsible for any use of,or reliance on,the work.Clean energy investment for development in Africa Table of contents PAGE|5 IEA.CC BY 4.0.Table

17、of contents Executive summary.6 Introduction.10 Chapter 1.The outlook.12 The Sustainable Africa Scenario.12 Hurdles to ramping up clean energy investment.17 Chapter 2.Access to energy.20 Key targets and investment needs.20 Financing vehicles and instruments.22 Chapter 3.The electricity sector.26 Key

18、 targets and investment needs.26 Financing vehicles and instruments.28 Chapter 4.Emerging industries.34 Key targets and investment needs.34 Critical minerals.34 Financing vehicles and mechanisms.41 Chapter 5.Mobilising investment.43 Creating a conducive investment ecosystem.43 Better leveraging publ

19、ic funds to attract private capital.44 Integrating cross-cutting developmental objectives.52 Required capacity-building initiatives.55 Annexes.58 Annex A Abbreviations and acronyms.58 Annex B Units of measure.60 Clean energy investment for development in Africa Executive summary PAGE|6 IEA.CC BY 4.0

20、.Executive summary Increasing energy investment is at the heart of enabling African prosperity Africas aspirations for greater economic and social development depend on access to affordable,reliable,modern and sustainable energy.Despite immense energy resources,Africa remains energy poor.Today,aroun

21、d 600 million Africans still lack access to electricity and more than 1 billion still cook their meals over open fires and traditional stoves using wood,charcoal,kerosene,coal and animal waste.The consequences are dire in terms of health,education,climate,and economic and social development,with man

22、y of these impacts disproportionally affecting women and children.A lack of reliable and affordable energy restrains Africas farmers from higher productivity;hinders industry,where energy prices and affordability remain key determinants in competitiveness;and limits the ability of countries to attra

23、ct and cultivate new sectors of their economies.Enhancing Africas energy systems can address these issues,but mobilising more investment remains challenging.Today,Africa accounts for around 20%of the worlds population but attracts less than 3%of spending on energy.Energy investment on the continent

24、has been falling since its peak in 2014 and is down by 34%.Increasing investment in domestic energy systems faces hurdles,notably a shortage of bankable projects and the high cost of capital,which can be two to three times higher for renewable projects in Africa than in advanced economies.Overlappin

25、g crises have also raised the bar for attracting new capital to Africa.Currently,21 African countries are in or are at high risk of being in debt distress,weighing heavily on public balance sheets and those of state-owned enterprises(SOEs).At the same time,higher interest rates have increased the ex

26、pectations on returns in commercial markets.For clean energy projects in emerging market and developing economies,this has resulted in an increase in expected returns greater than those in advanced economies.Meeting growing energy demand from African countries requires a more than doubling of annual

27、 energy investment by 2030,of which three-quarters is in clean energy.The IEAs Sustainable Africa Scenario lays out a pathway in which Africa achieves all its energy-related goals in full and on time,including its pledges on climate and access to electricity and clean cooking,and aligns with the goa

28、ls of the African Unions Agenda 2063:The Africa We Want.In this scenario,energy investment in Africa grows to almost USD 240 billion annually by 2030.This report commissioned by Italys G7 Presidency in support of its new initiative:Energy for Growth in Africa lays out key areas for investment that a

29、re Clean energy investment for development in Africa Executive summary PAGE|7 IEA.CC BY 4.0.consistent with the objectives set by countries in Africa and supports the realisation of the Dubai Consensuss objectives of tripling renewable capacity and doubling energy efficiency by 2030.The report also

30、highlights financing mechanisms best suited to ensure these investments materialise in a timely manner.Investments in energy access and the power sector remain the top priority for new energy infrastructure Extending access to electricity and clean cooking remains the most important lever for growth

31、 and development,and is central to a just energy transition.From 2023 to 2030,around USD 22 billion per year is required to connect all African homes and businesses to electricity,while USD 4 billion per year is needed to provide them with clean cooking solutions.In total,the needed annual investmen

32、ts in access for Africa equate to less than 1%of current energy investment worldwide.There are also affordability challenges to consider;only half of households without electricity access today would be able to afford basic energy services without additional financial support,and even fewer would be

33、 able to afford modern cooking solutions.A number of private companies based in Africa,many of which are small and medium-sized enterprises,are offering innovative solutions beyond traditional public-sector-led approaches but scaling them requires more financing and specialised incentives to reach r

34、ural areas.Recent multilateral efforts are attracting greater political attention to energy access and bringing in new concessional and commercial funding,including the USD 2.2 billion in new financing mobilised at the Summit for Clean Cooking in Africa.Around half of the energy investment required

35、in Africa to 2030 is needed in electricity,where policies play a key role in attracting more investment.Total electricity sector investment increases from just under USD 30 billion in 2022 to more than USD 120 billion in 2030 in the Sustainable Africa Scenario,with around 50%going towards renewable

36、generation alone.Africa is home to some of the most cost-competitive renewable resources in the world,with 60%of the best solar resources globally,and many countries are home to high-potential resources for hydropower,geothermal,and wind.Utility-scale renewable power projects,often based on power pu

37、rchase agreements,have found a foothold in markets with access to commercial finance in Africa,where around 80%of clean power projects by volume have reached investment decisions in the last five years.However,less developed markets,where three-quarters of African people live today,face greater perc

38、eived investment risks,especially where utilities are not seen as a credible off-taker.Authorising the use of concessional agreements or other regulatory carveouts for private investors can help attract new capital to debt-distressed utilities,as can tariff reform,though such approaches need to guar

39、d against the real risks of offering terms that are ultimately costly to consumers and governments.Clean energy investment for development in Africa Executive summary PAGE|8 IEA.CC BY 4.0.New industries,including those related to clean energy technologies,can support Africas growing energy sector De

40、veloping industry goes hand-in-hand with the expansion of Africas energy system.By 2030,Africa is projected to build more floor area than exists in Japan and Korea today.Accordingly,demand for steel and cement is set to grow considerably from todays levels,alongside rising demand for irrigation pump

41、s,cold chains,data centres and mining.Productive uses which include industry,agriculture,freight,and public and commercial buildings make up nearly half of the growth in electricity demand in Africa over the last ten years.These are often large and reliable customers that can financially encourage t

42、he development of new energy infrastructure.Based on todays prices,these uses cover two-thirds of Africas electricity expenditure,despite only representing just over half of Africas electricity demand.If structured well,development financing support for African industries can play a dual role:creati

43、ng reliable off-takers for new energy projects,while also providing the right incentives to install the efficient equipment that will underpin the energy systems of the future.This is increasingly important for new steel plants,with some countries currently electing to use coal-based technologies in

44、stead of hydrogen-ready,natural gas-based technologies which are cost-competitive for countries with easy access to natural gas.Critical minerals and the manufacturing of clean energy technologies present practical opportunities to cultivate a growing industrial base.Revenues from the production of

45、copper and key battery metals in Africa are already estimated to be more than USD 20 billion annually.The current pipeline implies a 65%increase in market value is possible by 2030,with significant potential for further growth given that investment in mineral exploration is on the rise again.New man

46、ufacturing plants for clean energy technologies and solutions to improve energy access are being developed across the continent as well,including some backed by the development finance institutions of G7 members.Additionally,low-emissions hydrogen production from announced electrolyser projects in A

47、frica could reach 2 Mt by 2030 if all projects come to fruition.Investments in these fast-growing sectors can help diversify global supply chains and reduce import burdens for Africa.If well-designed,these projects could also be powered by energy investments that serve Africas wider domestic energy

48、needs,and ensure their development creates jobs,supports local communities,and meets important health,safety,and labour criteria.Boosting energy investment relies on private sector participation,which concessional finance can help unlock Private sector spending needs to grow 2.5 times between 2022 a

49、nd 2030 to meet Africas energy investment needs.In the Sustainable Africa Scenario,USD 190 billion of private capital is required by 2030,growing from around Clean energy investment for development in Africa Executive summary PAGE|9 IEA.CC BY 4.0.USD 75 billion today.Concessional capital from intern

50、ational sources will play a key role in mobilising this increase,with an estimated USD 30 billion per year for clean energy projects required to mobilise commercial funding over the 2023-2030 period.Blended finance,a proven tool,can attract commercial financing that is up to seven times the level of

51、 concessional funding from donors.Blended finance whereby donors,development finance institutions(DFIs)and philanthropies use their funds to improve the risk-return profile of projects and attract private capital to a project will be crucial to achieving the level of investment needed in the Sustain

52、able Africa Scenario.The number of deals using blended finance in Africa has grown since 2014,with the volume doubling from 2019 levels to reach more than USD 3 billion in 2021.Other instruments have also demonstrated their ability to improve the risk-return profile of energy investments,including g

53、reen,social,sustainable and sustainability-linked(GSSS)bonds;carbon credits and voluntary carbon markets;syndication platforms and pooled investment vehicles,and instruments to address currency risk.Connecting concessional finance with the right projects remains a barrier but can be addressed Ongoin

54、g initiatives within the G7 can be reinforced with targeted technical assistance and improved coordination.G7 countries have reiterated their commitment to mobilise more energy and climate investment in Africa in the Climate,Energy and Environment Ministers Meeting Communiqu,including reinforcing ca

55、pacity building efforts.Over the past 10 years,advanced economies have provided,on average,USD 2.4 billion of development assistance to Africas energy sector annually.Our tracking shows that G7 members have programmes operating in nearly every country in sub-Saharan Africa with the aim of delivering

56、 greater energy and climate-oriented investments.These include Global Gateway,Just Energy Transition Partnerships,and the Partnership for Global Infrastructure and Investment.Many of these initiatives face similar challenges,notably developing a pipeline of bankable projects and guiding them through

57、 the higher-risk development and construction phases.A survey of ongoing activities,however,highlights several effective approaches that can help to address these gaps notably capacity building with African governments and small and medium-sized enterprises(SMEs),and developing new financing vehicle

58、s that absorb early-stage development risk.Scaling these efforts will be key to unlocking more finance for Africas energy sector,and to ensuring these investments realise the full suite of economic,development,energy security,health and climate benefits.Clean energy investment for development in Afr

59、ica Introduction PAGE|10 IEA.CC BY 4.0.Introduction Energy is vital to Africas long-term prosperity.It can unlock sustainable economic growth,improve human well-being,and enable healthier and more productive lives.The recent energy crisis,following on the heels of the Covid-19 pandemic and ensuing g

60、lobal economic disruption,has hit many African countries hard.Access to modern energy services remains a pressing concern,primarily in sub-Saharan countries,where half the population still lacks electricity,and four out of five people do not have access to clean and healthy cooking methods.Soaring e

61、nergy prices and the financial difficulties of electricity utilities have recently reversed the progress that had been made in expanding energy access.There has never been a more urgent need for a concerted push for investment in clean energy technologies to ensure universal access to modern energy,

62、drive economic and social development,and eradicate the poverty that persists across much of Africa.This investment will not happen on a sufficiently large scale without strong interventions by the governments of African countries and the assistance of developed nations,international financial insti

63、tutions and development organisations.Financing Africas energy development is a massive undertaking and must overcome several hurdles notably the high cost of capital faced by investors in energy projects and a lack of bankable projects.Evidence of this can be seen in Africas ability to attract fina

64、ncing to its energy sector:while Africa accounts for around 20%of the worlds population,it attracts less than 3%of its spending on energy,and energy investment in the continent has been falling in recent years.Mobilising international funding,notably concessional finance,will be crucial.This report

65、aims to provide an overview of the energy-related investments that are needed to meet the targets set out by African countries in their nationally determined contributions(NDCs)under the Paris Agreement,their net zero goals,the United Nations Sustainable Development Goal 7(SDG 7)on access to afforda

66、ble and clean energy,and the 2023 Nairobi Declaration on climate change.The report also analyses how clean energy projects would need to be financed and the supporting policies and measures required to make that happen,focusing on three key investment pillars:household access to modern energy;the el

67、ectricity sector;and emerging industries,including manufacturing of clean energy technologies,hydrogen and related fuels,and critical minerals.Finally,the report identifies the main types of initiatives needed to build human and institutional skills and capabilities in Africa,without which the finan

68、cing of clean energy will remain constrained in many countries.Clean energy investment for development in Africa Introduction PAGE|11 IEA.CC BY 4.0.This report on financing clean energy investments in Africa was requested by the Italian Presidency of the Group of Seven(G7).African development is a m

69、ajor focus of Italys G7 agenda,exemplified by the Italy-Africa Summit held in January 2024,which was attended by high-level representatives from 46 African countries,major international organisations including the IEA international financial and development institutions,multilateral development bank

70、s,and leaders of the European Union.The Italian G7 Presidencys new initiative,Energy for Growth in Africa,aims to build upon existing G7 efforts to promote sustainable energy in Africa by leveraging programmes from advanced economies,such as the Mattei Plan,to direct development and climate funding

71、towards financing vehicles that could attract further private capital.Announced at the Climate,Energy and Environment Ministers Meeting on 29-30 April 2024 and launched at the G7 Summit on 13-15 June 2024,with the IEA as a knowledge partner and the United Nations Development Programme(UNDP)as the im

72、plementation partner,this initiative seeks to develop bankable clean energy projects,attract public and private capital,encourage concessional finance,and overcome investment barriers across Africa.This report aims to inform the G7 initiative by providing an overview of the energy-related investment

73、s needed in the IEAs Sustainable Africa Scenario(SAS).The SAS is a pathway developed by the IEA that envisions the continent achieving all its energy and climate-related goals,including universal energy access and its NDCs,by 2030.Clean energy investment for development in Africa Chapter 1:The outlo

74、ok PAGE|12 IEA.CC BY 4.0.Chapter 1.The outlook The Sustainable Africa Scenario Energy and investment trends The Sustainable Africa Scenario(SAS),first set out in the IEAs Africa Energy Outlook 2022,describes a realistic pathway for the continent to achieve the energy-related goals set out in Sustain

75、able Development Goal 7,including universal access to modern energy by 2030,as well as fulfilling all announced climate pledges,including conditional NDCs,in full and on time.1 This requires a steep increase in investment,a shift away from export-oriented projects towards clean energy projects predi

76、cated on local demand,and enabling a greater role for decentralised systems.This hinges on tapping into a range of new capital sources and financing approaches.Providing modern energy services to the 600 million Africans still lacking electricity and the more than 1 billion without access to clean c

77、ooking remains the priority of the SAS.Economic growth across the region also drives higher demand for modern energy from industry,transport and agriculture in this scenario.Modern primary energy supply rises to 2030,an increase that is propelled mainly by renewables accounting for more than four-fi

78、fths of the total,though oil use also rises sharply,primarily due to strong growth in transport demand.In the SAS,electricity use grows across all end-use sectors,with households contributing more than half of the growth.In total,demand surges by more than 60%between 2022 and 2030 to 1 160 TWh,drive

79、n largely by more than a doubling of household use of air conditioners,fans and refrigerators.The share of electricity in total final energy consumption jumps from 10%to 20%.Renewable energy generation,mainly from solar PV,accounts for most generating capacity additions as declining costs drive rapi

80、d global uptake.By 2030,solar and wind together provide 27%of the continents power generation,compared with barely 5%in 2022.Energy trends to 2030 are very different across Africa.Although modern renewables grow fastest everywhere,oil and gas continue to dominate energy 1 In the rest of the world,it

81、 is assumed that all announced global commitments to reach net zero emissions are fully implemented,as per the Announced Policies Scenario.See the latest edition of the IEAs World Energy Outlook(WEO)for further details.Clean energy investment for development in Africa Chapter 1:The outlook PAGE|13 I

82、EA.CC BY 4.0.supply in North Africa and coal in South Africa,while renewables become the dominant fuel category in subSaharan Africa.Total energy investment in Africa was already declining prior to the Covid-19 pandemic(Figure 1.1).Historically,fossil fuel supply primarily oil and gas production has

83、 dominated energy investment in Africa,and a sharp fall in upstream investment explains most of the fall in overall capital spending since 2015.Investment fell even lower in 2020,and while it has been increasing slightly year-on-year since then,in 2022 the almost USD 90 billion invested in energy wa

84、s equal to around 3.5%of Africas GDP,well below percentages seen in the decade prior.Figure 1.1 Energy investment in Africa by type,2014-2023 IEA.CC BY 4.0.Overall energy investments in Africa were on a downward trend in the 2015-2020 period,although they have begun most recently to pick up In the S

85、AS,energy investment in Africa picks up in the period to 2030,driven by a surge in clean energy spending(Figure 1.2).Clean energy investment rises to reach nearly three-quarters of energy investment by the end of this decade.Still,around 30%of total spending goes to fossil fuel supply over the 2022-

86、2030 period.Total annual investments in renewables and power grids see a substantial climb,jumping from almost USD 39 billion in 2023 to an average of USD 172 billion in 2028-2030.30 60 90 120 150 1802014201520162017201820192020202120222023Clean energyFossil fuel-relatedBillion USD(2022,MER)Clean en

87、ergy investment for development in Africa Chapter 1:The outlook PAGE|14 IEA.CC BY 4.0.Figure 1.2 Average annual energy investment in Africa by sector and share by type of energy and investor in the Sustainable Africa Scenario IEA.CC BY 4.0.Annual capital spending on energy grows more than double,rea

88、ching an average of USD 225 billion in 2028-2030,with three-quarters of the investment in clean energy Renewable generation and power grids together account for close to 70%of the clean energy investment needed over 2023-30 in the SAS and over 80%of all new power generation capacity added over 2023-

89、30.Solar remains the largest growing source,as Africa is home to 60%of the best solar resources globally,yet only 1%of installed solar PV capacity today.By 2030,solar PV already the cheapest source of power in many parts of the continent outcompetes all other generating technologies continent-wide.T

90、hese capacity additions call for large investments in grid infrastructure,both to expand network capacity and to upgrade grids to provide adequate flexibility and support the integration of renewables,including through the installation of digital technologies(see Chapter 3).Regional interconnections

91、 need to be strengthened and their operations better integrated to effectively manage the impact of intermittency of renewable power generation on the stability and reliability of national power systems.Dispatchable power providers such as hydropower,natural gas,battery and pumped-hydro storage are

92、also needed to provide flexibility.Investment to reach the goal of universal access to modern energy averages USD 26 billion per year over 2022-30 in the SAS,accounting for around 15%of total African energy investment.Of this investment,USD 22 billion per year goes to electricity access,while around

93、 USD 4 billion is channelled to provide individuals with clean cooking devices.Mobilising this level of investment is contingent on a major policy push for access projects,involving the establishment of national targets and action plans that clearly lay out the role of different energy access soluti

94、ons and providers,coupled with new financing solutions to support 2028-302025-272023 50 100 150 200 2503%4%5%6%7%Billion USD(2022,MER)Share of GDPFuel supplyPowerEnd useShare of GDPInvestment by sector and share of GDPShares by type of energyInvestmentFossil fuel-relatedClean energyEnergy shareClean

95、 energy investment for development in Africa Chapter 1:The outlook PAGE|15 IEA.CC BY 4.0.the effective use of public funds and attract private capital where possible(see Chapter 2).Investment is also needed to drive the switch to electric two-and three-wheelers,as well as green public transport such

96、 as electric buses and urban rail systems,and the use of renewables in buildings and industry for heating and cooling.Sources of finance In the SAS,private investment increases 2.5 times between 2022 and 2030 in absolute terms,buoyed by policy reforms and the use of concessional capital from develop

97、ment finance institutions(DFIs)to de-risk projects.Concessional financing takes many forms but typically involves several broad instruments including grants that do not need to be repaid,loans with very favourable interest rates or guarantees whereby a third party agrees to cover losses in case repa

98、yments cannot be made.DFIs2 play the dual role of investing their own capital,both in projects via debt and equity and in early-stage development financing,while also using their concessional funds to mobilise private capital(Figure 1.3).Finance for energy projects in Africa from DFIs in advanced ec

99、onomies has largely been stable at around USD 11 billion annually,while Chinese DFI activity boomed in the middle of last decade at USD 14 billion but has fallen back substantially in recent years(Box 1.1).In total,an average of around USD 30 billion per year of concessional finance is required in t

100、he SAS between now and 2030 to help attract the USD 190 billion of private capital for energy projects in 2030 needed in that same scenario.Today,DFI finance plays a particularly prominent role in renewable power generation,including that related to electricity and clean cooking access projects,and

101、emerging technologies(such as low-emissions hydrogen).State-owned enterprises(SOEs)retain a key role in grids and storage,although achieving the necessary level of investment relies on improving their financial health,which has deteriorated in many cases in recent years,most likely requiring grants

102、and other forms of concessional support from DFIs and donors.2 Multilateral development banks(MDBs),other international and regional financial institutions,national development banks and export credit agencies.Clean energy investment for development in Africa Chapter 1:The outlook PAGE|16 IEA.CC BY

103、4.0.Figure 1.3 Sources of finance for clean energy investments in Africa by sector,provider and instrument in the Sustainable Africa Scenario,2030 IEA.CC BY 4.0.The private sector plays the main role in all energy investment categories except grids by 2030,with equity remaining important for new tec

104、hnologies and end-use sectors Note:SAS=Sustainable Africa Scenario;DFI=development finance institution.Source:IEA(2023),Financing Clean Energy in Africa.Scaling up investment in energy hinges on mobilising capital providers and financing instruments to match the capital structure of energy companies

105、 and assets.As with most project finance investments,debt plays a large role in most clean energy developments.Commercial debt in Africa can be expensive and in short supply since debt markets are small outside South Africa,while public debt has become increasingly unsustainable in many economies.Cu

106、rrently,21 African countries are in or are at high risk of being in debt distress,weighing heavily on public balance sheets and those of SOEs.At the same time,higher interest rates have increased the expectations of returns in commercial markets.For clean energy projects in emerging market and devel

107、oping economies this has resulted in an increase in expected returns greater than those in advanced economies.However,alternative financing approaches exist,each utilising different debt-to-equity ratios according to the stage of the project.While the role of debt increases in the SAS,equity remains

108、 essential where risks are higher,such as in new markets and for novel technologies.Equity capital is limited in most African countries,with many of the equity funds which currently finance energy projects funded by DFIs.Other sources of equity include corporate balance sheets and for start-ups and

109、small and medium-sized enterprises private equity and venture capital firms.50%100%Low-emissions fuelsOther end useEfficiencyGrids and storageRenewable powerPrivateDFIsPublicDebtEquityBy provider50%100%By instrumentClean energy investment for development in Africa Chapter 1:The outlook PAGE|17 IEA.C

110、C BY 4.0.Hurdles to ramping up clean energy investment Improving access to affordable finance is key to achieving the huge increase in investment in clean energy projects required to put Africa on a sustainable development path.At present,there are several hurdles to financing such projects,reflecte

111、d in the high cost of capital relative to other parts of the world;the weighted average cost of capital for renewable generation projects in Africa is currently at least two to three times higher than in the advanced economies and China(see Figure 1.4).This is due to the greater risks,real or percei

112、ved,of investing in Africa.Box 1.1.Chinese investment in Africas energy sector The involvement of the Peoples Republic of China(hereafter“China”)in African economies took off in the early 2000s,and the country became the continents largest trading partner in 2009.China is now the fourthlargest inves

113、tor in Africa and accounts for about onefifth of all lending,much of which goes to energy and infrastructure projects.China committed to USD 150 billion in loans to Africa between 2000 and 2018,roughly a quarter of which were in the energy sector.However,lending to African power projects fell from i

114、ts peak of almost USD 14 billion in 2016 to USD 2 billion in 2019 as Chinas policy banks focused more on domestic projects.Financing from China has primarily been in the form of large low-cost loans from development banks and energy-or construction-oriented SOEs.The level of lending has led to conce

115、rns around the sustainability of debt,particularly as Chinese loans are generally exempt from the restructuring arrangement of the Paris Club a group of officials from major creditor countries whose role is to develop coordinated solutions to address payment difficulties in debtor countries.Several

116、African countries have been forced to renegotiate repayment terms,notably in the case of loans to railways in Kenya and Ethiopia.Default risks on the continent are rising due to the combination of increased debt since the Covid19 pandemic and inflationary pressures.Changing dynamics point to a shift

117、 in Chinas dealings with Africa.At the Forum on China Africa Cooperation in November 2021,Chinas president announced a onethird reduction in public financing to Africa and emphasised the growing role of Chinese private investment,although no specific targets have been announced.Together with Chinas

118、move away from funding coal plants abroad,this is likely to result in more emphasis on renewable energy projects by Chinese developers.Source:IEA(2022),Africa Energy Outlook 2022 Clean energy investment for development in Africa Chapter 1:The outlook PAGE|18 IEA.CC BY 4.0.Figure 1.4 Cost of capital

119、ranges for solar PV and storage projects taking final investment decision in 2022 IEA.CC BY 4.0.The cost of capital for solar PV and storage projects in EMDE is at least twice the value in advanced economies,despite relatively larger interest rate hikes in advanced economies Notes:Values are express

120、ed in nominal,post-tax and local currency.WACCs for solar PV projects represent responses for a 100-megawatt(MW)project and for utility-scale batteries a 40 MW project.Values represent average medians across countries.Advanced economies represent values in the United States and Europe.Source:IEA(202

121、4),World Energy Investment 2024;IEA(2024),Cost of Capital Observatory.Higher costs of capital act as a brake on private sector involvement as they make projects either unaffordable or unviable for the investor.They can also leave countries trapped in a loop of higher risks,higher costs,energy defici

122、ts and deepened reliance on fossil fuels,which typically require less upfront investment.A high cost of capital has a particularly large impact on capital-intensive investments such as renewable power projects,including off-grid solutions.As a result,it raises overall power generation costs,which ar

123、e either passed on to customers or absorbed by governments as subsidies.The cost of capital largely reflects two sets of risks:those associated with the country(the base rate)and those associated with the sector,project or company(the premium).These risks vary considerably across the continent;some

124、countries have investment-grade credit ratings and/or a well-developed energy sector,while others are plagued by social and political conflict or instability and low economic growth,and thus struggle to attract investment.Costs also vary by capital provider and currency,depending on whether the prov

125、ider is taking on currency risk,their familiarity with the local market and the base rate in their country of origin,as well as according to the company or project that is seeking to raise capital.Larger international companies are able to tap into concessional finance from DFIs and donors or cheape

126、r capital in international markets more 3%6%9%12%15%Solar PVStorageEmerging market and developing economiesAdvanced economiesClean energy investment for development in Africa Chapter 1:The outlook PAGE|19 IEA.CC BY 4.0.easily.Meanwhile,local companies more reliant on domestic capital markets can str

127、uggle to access both early-stage financing to make projects bankable and sufficient affordable capital to develop projects.Certain investment risks originate from outside the energy sector,but there are financial tools,policy measures and technical assistance that can help mitigate project-specific

128、risks and help ensure more projects reach financial close.The main energy sector-specific factors driving higher costs of capital for clean energy projects according to a survey of investors are regulatory risk(e.g.changing regulations,government renegotiations of contract terms),off-taker risk(e.g.

129、no credible buyer,utility financial distress),land acquisition risks,and transmission risks(e.g.delays in interconnection or not being able to reliable deliver energy to the grid due to network issues).Addressing these risks will be key to the focus of the new G7 initiative,Energy for Growth in Afri

130、ca.Clean energy investment for development in Africa Chapter 2:Access to modern energy services PAGE|20 IEA.CC BY 4.0.Chapter 2.Access to energy Key targets and investment needs Ensuring that everyone has access to modern energy services remains the primary developmental goal for Africa.According to

131、 IEA data,around 600 million Africans lack access to electricity and more than 1 billion Africans roughly two-thirds of the population still cook their meals over open fires and traditional stoves,using wood,charcoal,kerosene,coal and animal waste.Most of these people are in sub-Saharan Africa,conce

132、ntrated in just five countries:Democratic Republic of the Congo,Ethiopia,Nigeria,Tanzania and Uganda.The consequences of such“energy poverty”are dire.A lack of electricity undermines public health,education and communication and holds back economic and social development.Poor air quality due to cook

133、ing indoors using traditional fuels is the second-leading cause of premature deaths across the continent.Women suffer the most,both directly from the pollution and from forgoing opportunities to pursue schooling,employment and revenue-generating economic activities as they spend five hours a day on

134、average gathering fuel and tending to cooking fires.A lack of clean cooking also contributes to deforestation,environmental degradation and climate change.Africa was already well off track to reach the Sustainable Development Goal 7(SDG 7)target,set in 2015,of universal access to modern energy by 20

135、30 at the beginning of 2020 and the Covid19 pandemic.The recent energy crisis has set back progress even more,despite a modest tick upward during 2023.Current government policies fall far short of what is required to meet that goal,and without additional measures,550 million people will still be wit

136、hout access to electricity and around 1 billion still without access to clean cooking even in 2030.Political momentum is growing to resolve these issues,notably for clean cooking,with renewed focus within the G7,G20,and Conference of the Parties(COP),and USD 2.2 billion of new financial commitments

137、announced at the Summit on Clean Cooking in Africa,convened in Paris on 14 May 2024.Still more is required to get Africa on track to achieve universal access to modern energy services by 2030 a central pillar of the Sustainable Africa Scenario(SAS).For every African to have access to electricity by

138、2030(SDG 7.1),almost 70 million people,or 5%of the current total population,including 60 million from rural areas,would need to gain access each year on average from 2023.In rural areas,where more than 80%of Africans without electricity access live today,progress needs to be even faster.Rural custom

139、ers predominantly gain access Clean energy investment for development in Africa Chapter 2:Access to modern energy services PAGE|21 IEA.CC BY 4.0.through standalone and minigrid systems,which can provide first access quickly and represent roughly twothirds of new connections by 2030 in the SAS(Figure

140、 2.1).Figure 2.1 Africans gaining access to modern energy by type and technology in the Sustainable Africa Scenario,2023-2030 IEA.CC BY 4.0.Universal access to electricity is achieved largely through off-grid solutions,while access to clean cooking comes mainly through improved cookstoves and LPG No

141、te:LPG=liquefied petroleum gas.Source:IEA(2022),Africa Energy Outlook 2022.Achieving universal access to clean cooking fuels and technologies by 2030(SDG 7.2)in Africa requires an abrupt reversal of current trends;the population without access has been climbing continuously.In the SAS,130 million Af

142、ricans(including 80 million in rural areas)gain access to clean cooking each year between 2023 and 2030 roughly 10%of Africas current population each year.Around 40%of the people gaining firsttime access to clean cooking by 2030 do so with the use of solid biomass in improved biomass cookstoves,whic

143、h is generally the cheapest and most practical means of providing clean cooking in rural areas.Onethird of the people gain access via LPG,10%via electricity,10%via biogas from biodigesters and 6%via ethanol.In urban areas,LPG represents a practical,quickly deployable clean cooking solution;however,m

144、ore African households adopt electric cooking after 2030 as electricity becomes more reliable and connections are strengthened.On average,around USD 22 billion per year in investment is required to connect Africans to electricity sources and USD 4 billion per year to provide them with clean cooking

145、devices over 2023-30 in the SAS.These are modest sums less than 1%of current energy investment globally and would bring enormous 42%31%27%Electricity:GridMini-gridStand-aloneClean cooking:Improved cookstovesLPGElectricityBiogasEthanolElectricity90 million people gaining access per year41%33%10%10%6%

146、Clean cooking130 million people gaining access per yearElectricityClean cookingClean energy investment for development in Africa Chapter 2:Access to modern energy services PAGE|22 IEA.CC BY 4.0.benefits,such as better health,improved conditions for women and children,and general economic development

147、.However,mobilising this investment represents a massive undertaking for the poorest African countries in view of the limited public funds and local private capital at their disposal.Current investment falls far short of these levels:in 2019,it amounted to just 10%of the average needs for 2023-2030

148、in the case of electricity and 3%for clean cooking(Figure 2.2).In the case of electricity access,the bulk of investment to 2030 is needed for decentralised mini-grids and stand-alone systems,mostly solar photovoltaic(PV)based.For clean cooking,end-use equipment requires the most finance,with infrast

149、ructure in fuel supply,delivery and supply chains needing about 40%of the annual investment.Figure 2.2 Annual investment in and people gaining access to electricity and clean cooking in Africa in the Sustainable Africa Scenario,2019 and 2023-2030 IEA.CC BY 4.0.To achieve universal access,investment

150、in electricity access infrastructure needs to increase sevenfold and investment in clean cooking over twenty-fold Note:Historical data for investment in access to electricity comprise not only first access projects,but also investment aimed at improving the level of access for households already wit

151、h access.Sources:IEA(2023),A Vision for Clean Cooking Access for All;IEA analysis based on SE4All and Climate Policy Initiative(2021),Energizing Finance:Understanding the Landscape.Financing vehicles and instruments There is a range of financing vehicles and instruments available for energy access p

152、rojects,but in general,a high share of it would need to be concessional to address the affordability gap that many African households face.While accompanying infrastructure for grids and fuel distribution rely on a wider set of 306090 10 20 3020192023-2030Billion USD(MER,2022)HistoricGridInfrastruct

153、ureMini-gridsStand-aloneEnd-use equipmentPeople gaining access(right axis)60120180 2 4 620192023-2030Million peopleElectricityClean cookingClean energy investment for development in Africa Chapter 2:Access to modern energy services PAGE|23 IEA.CC BY 4.0.financing approaches and tools,they can also b

154、enefit from any measures that improve end-user payment reliability(Table 2.1).Table 2.1 Common financing instruments by type of energy access project and project stage Project type Development Operation Grids Grants Concessional equity and debt Corporate cash flow Viability gap funding Corporate bon

155、ds(if credit rating allows)Mini-grids Grants Concessional equity and debt Commercial debt Viability gap funding Private equity(PE)/venture capital(VC)Commercial debt Results-based finance Aggregation/securitisation Corporate(growth)equity and,where possible,public listing Stand-alone solar Technical

156、 assistance and grants Concessional equity and debt Corporate equity(PE/VC)Concessional or commercial debt Results-based finance Aggregation/securitisation Corporate(growth)equity and,where possible,public listing Carbon markets Clean cooking Technical assistance and grants Concessional equity and d

157、ebt Corporate equity(PE/VC)Carbon markets Results-based finance Aggregation/securitisation Notes:Equity can be concessional if it is provided in a subordinated or first-loss capacity,or if it has lower return expectations or a longer time period to exit.Aggregation and securitisation refer to the po

158、oling of assets and selling the cash flows to investors to raise capital,generally via an asset-backed security or a bond.Viability gap funding refers to the practice of providing grants or concessional short-term loans to projects that are economically beneficial but not financially viable.Results-

159、based financing refers to approaches where payments are made,usually by governments,donors or development finance institutions(DFIs)to the private sector,on the achievement of predefined results.Source:IEA(2023),Financing Clean Energy in Africa.The primary hurdle to attracting finance for expanding

160、energy access is affordability,especially in rural areas.As a result,government affordability support and concessional financing are essential if all households are to gain access by 2030.It is estimated that due to affordability constraints,only around half of the new electricity access connections

161、 providing the most basic energy services3 in the SAS are likely to be commercially viable without incentives such as reduced connection charges,lower tariffs and subsidised electrical appliances.The situation is similar for clean cooking access projects where the upfront cost of stoves and the cost

162、 of fuels,such as electricity,LPG and charcoal,undermine adoption.For example,LPG is one of the key solutions to closing the access gap,3 The basic bundle includes more than one light point providing task lighting,phone charging and a radio.For further information on these definitions see Guidebook

163、for Improved Electricity Access Statistics.Clean energy investment for development in Africa Chapter 2:Access to modern energy services PAGE|24 IEA.CC BY 4.0.yet only one-fifth of the population without access could afford to switch to LPG at current tariffs if they were given access to affordable c

164、redit to purchase the LPG stove and cylinder.Excluding current affordability support,only 5%of those without access today could afford LPG cooking.Making electricity affordable requires a combination of well-targeted government incentives covering grid and off-grid solutions(potentially involving cr

165、oss-subsidisation),de-risking instruments such as grants,existence of productive uses as anchor loads and tariff reforms.Traditionally,many African countries have subsidised domestic energy by setting prices at below-market levels,but this has often led to electricity utilities and other energy comp

166、anies usually state-owned enterprises(SOEs)failing to recover their costs,resulting in rising debt,falling investment and an inability to expand new connections fast enough.Making clean cooking affordable on the other hand typically requires the upfront costs of acquiring the equipment to be subsidi

167、sed.Solutions based on“PayGo”models,where families pay as they use gas,or models based on smaller gas cylinders that reduce the cost of each refill,have proven successful in some markets,including Kenya and South Africa,but usually need to go together with subsidised prices.Adequately funded nationa

168、l access programmes,involving transparent subsidy mechanisms,are an important prerequisite.Currently,only 41%of the people without access to electricity in Africa and 55%of those without access to clean cooking are in countries with programmes that provide affordability assistance to consumers for a

169、ccess.Developing integrated energy strategies is a fundamental building block to attract supporting investment by providing greater certainty to investors.Governments also have a major role to play in funding access projects.Grid extensions are generally the responsibility of SOEs,so are indirectly

170、publicly funded.This is expected to remain the case in the medium term:roughly four-fifths of grid investments are carried out by public utilities in 2030 in the SAS(see Chapter 3).Private sector financing is set to take on a larger role,though this is likely to be limited to countries that have rel

171、atively well-developed power systems and a stable regulatory environment.It also requires governments to make private involvement legally viable by authorising the use of concessional agreements or other regulatory carveouts for private sector investment and ownership,and as a matter of best practic

172、e should be accompanied by auctions and competitive tenders.Some successful grid extension programmes have combined central government and local community financing,ensuring local engagement.For example,in 2020,Ghana introduced the Self-Help Electrification Scheme,which allowed communities to be con

173、nected to the grid earlier if they could provide poles for low-voltage lines and guarantee that at least 30%of the households in the community Clean energy investment for development in Africa Chapter 2:Access to modern energy services PAGE|25 IEA.CC BY 4.0.were ready to start using the electricity

174、provided.Some countries,such as Cte dIvoire,have implemented the option of on-bill repayment of connection costs,reducing the upfront burden and permitting many households to connect to the grid legally.Mini-grid projects also typically depend on public sector assistance to support the relatively hi

175、gh upfront costs and to ensure a tariff structure that is both cost-reflective and sensitive to what end users can afford.When it comes to stand-alone systems providing electricity,their inherent small scale often poses a barrier to finance.Traditional channels of energy financing are not well adapt

176、ed to support these smaller,higher-risk projects,or to finance small and medium-sized enterprises and local start-ups.These companies often struggle to access DFI capital or other international sources of finance and,therefore,rely more on local commercial banks.As a result,many of them operate as r

177、etail businesses,which can attract more private capital but need to focus on the most profitable projects.There will need to be an increase in patient equity and affordable local currency debt,as well as an emphasis on early-stage financing,to support the development of bankable projects.An alternat

178、ive approach would be an energy-as-a-service model via public-private partnership,whereby the government leverages DFI capital to buy the solar home systems from a private developer,and the households pay affordable tariffs for the use of energy(and providing for equipment maintenance)under a long-t

179、erm contract.In view of the constraints on public spending and the difficulties facing SOEs,especially electricity utilities,international concessional capital from DFIs and private donors will need to continue to play a critical role in de-risking access projects and leveraging private sector finan

180、ce,especially for projects aimed at the poorest households in the most remote regions that would otherwise struggle to attract investment.Concessional financing needs to be focused on projects where their presence can crowd in commercial financing.In the case of clean cooking projects,the share of p

181、rivate capital in international financial flows to Africa has been growing in recent years,in part thanks to the leveraging effect of concessional capital from DFIs and growing funds from carbon markets.Given the limited availability of concessional finance and the large amounts of capital needed to

182、 expand access projects,it is vital that concessional funds from DFIs and philanthropies are used in such a way as to mobilise the maximum amount of private capital by improving the risk-return profile of projects and lowering the cost of capital.A number of so-called blended finance instruments can

183、 be used to stimulate private investment in access projects,including guarantees or other risk-sharing and liquidity support to mitigate risks,or providing grants to support project preparation and project structuring(see Chapter 5).Clean energy investment for development in Africa Chapter 3:The ele

184、ctricity sector PAGE|26 IEA.CC BY 4.0.Chapter 3.The electricity sector Key targets and investment needs The electricity sector lies at the heart of the energy transition and is central to achieving universal access to modern energy services.In many African countries today,the sector is suffering fro

185、m years of under-investment and poor operational and financial performance,including large network losses,low collection rates,widespread under-recovery of costs and unmet demand.Major reforms and new sources of finance will be needed to bring about a step increase in investment in generating capaci

186、ty,transmission and distribution.Ensuring universal access to reliable electricity for all households,schools,hospitals,companies and businesses,together with an underlying shift towards the electrification of energy end uses,means electricity becomes the fastest-growing component of final demand in

187、 Africa in the Sustainable Africa Scenario(SAS).Electricity demand surges by around 60%this decade from a little over 700 TWh in 2022 to more than 1 160 TWh in 2030,driven by both households gaining access and greater use of electricity in industry and other productive uses.The majority of this incr

188、ease in demand is met by increased generation from renewables primarily hydropower(160 TWh to 312 TWh in 2022-30),solar PV(16 TWh to 215 TWh)and wind(25 TWh to 156 TWh).This shift towards renewables is driven by falling costs and policies promoting low-emissions energy,capitalising on Africas abunda

189、nt resources.By 2030,solar PV and wind combined contribute 38%to total power generation eight times more than in 2022.Installed power generation capacity in Africa doubles in the SAS,from 278 GW in 2022 to 510 GW in 2030,with a profound shift in the type of power plants built across the continent.Re

190、newables account for 80%of the generating capacity additions.Solar PV leads the way,with 120 GW of capacity added between 2022 and 2030 over 40%of the total increase in capacity.It overtakes hydropower before 2030 and approaches natural gas as the largest source of power generation capacity(Figure 3

191、.1).Wind power capacity also expands rapidly,especially in North and East Africa,where resources are located close to demand centres.Hydropower also remains a cornerstone,with several largescale projects currently under development to provide affordable and dispatchable electricity.Natural gas-fired

192、 capacity continues to grow,but more slowly than in recent years.The relative stability of the oil-fired plant fleet hides different regional dynamics,with an increase in capacity related to expanded access in subSaharan Africa offset by a decline in North Africa.Clean energy investment for developm

193、ent in Africa Chapter 3:The electricity sector PAGE|27 IEA.CC BY 4.0.Figure 3.1 Installed power generation capacity in Africa by source in the Sustainable Africa Scenario,2010-2030 IEA.CC BY 4.0.Solar PV,hydropower and wind capacity surpass that of coal and oil this decade,while the dominant positio

194、n of natural gas is overturned in the 2030s Source:IEA(2022),Africa Energy Outlook 2022.The rapid growth in the share of intermittent renewables has implications for the operation of power systems,which must be managed in conjunction with efforts to shore up electricity reliability.A range of assets

195、 and measures are developed to improve reliability and improve system flexibility in the SAS from now to 2030,including hydropower facilities(including pumped storage),gas-fired power plants,geothermal plants and energy storage.Improvements in grid operation in terms of scheduling and dispatch are a

196、lso needed to make the most of these dispatchable resources.Battery storage deployment remains modest to 2030,but accelerates quickly thereafter,mainly to provide shortduration flexibility and provide stable power supply in both on-grid and off-grid applications.Electricity sector investment account

197、s for around half of all energy investment by 2030 in the SAS(Figure 3.2).Total electricity sector investment rises from an estimated USD 30 billion in 2022 to USD 120 billion in 2030,with renewables accounting for over half of this amount.Solar PV accounts for the bulk of this investment.30 60 90 1

198、20 15020102015202020252030GWNatural gasSolar PVHydroWindCoalOilOther renewablesBioenergyNuclearClean energy investment for development in Africa Chapter 3:The electricity sector PAGE|28 IEA.CC BY 4.0.Figure 3.2 Electricity sector investment by sector in Africa in the Sustainable Africa Scenario,2022

199、-2030 IEA.CC BY 4.0.Reaching the continents Sustainable Development Goals,including energy access and climate targets,will require nearly a fivefold increase in electricity sector investment by 2030.This increase is driven mainly by clean energy and infrastructure Note:STEPS=Stated Policies Scenario

200、;SAS=Sustainable Africa Scenario.Grid investment excludes that related to extending electricity access.Supporting these capacity additions requires large-scale investments in grid infrastructure,not just to expand networks to meet the needs of newly connected customers and rising demand from existin

201、g ones,but also to upgrade them to provide adequate flexibility,support the integration of digital technologies to improve real-time awareness of the situation on the grid and improve the ability for dispatchers to operate the grid.The achievement of universal access to electricity by 2030 is a sign

202、ificant driver of electricity sector investment,accounting for 13%of the total over 2023-2030,compared with barely 4%in 2019-2022.Maintenance and modernisation of existing infrastructure represents almost a quarter of total capital spending on grids to 2030,helping to reduce network losses in 2030 b

203、y 30%compared with 2022.The financial difficulties experienced by many utilities over several years have hampered investment in new transmission and distribution assets as well as the maintenance of existing ones,resulting in a deterioration in operational performance,including increasing network lo

204、sses.Most utilities report losses of at least 10%,with an average of 15%across the continent in 2020 more than double the global average of 7%.Financing vehicles and instruments The way electricity sector investment in Africa is financed must evolve to support the near-tripling of investment by 2030

205、 and a shift towards renewables and networks in the SAS.The types of financing instruments typically used for power and network projects vary markedly according to the type of projects,the technology involved,the maturity of the market and the project stage(Table 3.1).50 100 15020222030Billion USD(2

206、022)OtherGrids and storageAccessFossil fuel generationRenewables:WindHydroSolarOther RenewablesClean energy investment for development in Africa Chapter 3:The electricity sector PAGE|29 IEA.CC BY 4.0.For instance,solar PV and wind projects can benefit from technical assistance in early development s

207、tages and concessional equity and debt during their development,but once they are operational with a proven performance,they can be refinanced on commercial capital.Arrangements for private investments are also an important factor.Several models to facilitate private sector participation in the powe

208、r sector are in operation across the continent,including long-term concessions;build,own,operate and transfer(BOOT)projects;merchant plants,long-term power purchase agreements facilitated by auctions,and transmission lines;and dedicated lines for independent power projects.Table 3.1 Common financing

209、 instruments for power generation and networks by technology and project stage Technology Development Construction Operation Solar PV/wind nascent market Technical assistance grants;seed grants Concessional equity Corporate cash flow Concessional debt Viability gap funding Corporate equity(private e

210、quity PE/venture capital VC)Commercial debt Aggregation;securitisation Solar PV/wind developed market Corporate cash flow Equity Project finance Commercial debt Corporate equity(PE/VC)Commercial debt Refinance via corporate bond(if credit rating allows;on local markets ideally)Geothermal and hydro T

211、echnical assistance grants in new markets,such as resource potential assessment Equity Funding from state-owned enterprises(SOEs)Project finance Concessional debt Corporate equity(PE/VC)Commercial debt Refinance via corporate bond Transmission and distribution Grants Corporate cash flow Concessional

212、 equity Grants Viability gap funding Concessional debt and equity Corporate bond(if credit rating allows;on local markets ideally)Notes:Equity can be concessional if it is provided in a subordinated or first-loss capacity,or if it has lower return expectations or a longer time period to exit.Viabili

213、ty gap funding can take several forms but refers to the practice of providing grants or concessional short-term loans to projects that are economically significant but not financially viable.Aggregation and securitisation refer to the pooling of assets and selling the cash flows to investors to rais

214、e capital,generally via an asset-backed security or a bond.Viability gap funding refers to the practice of providing grants or concessional short-term loans to projects that are economically beneficial but not financially viable.Source:IEA(2023),Financing Clean Energy in Africa.Utility-scale renewab

215、le power projects Utility-scale renewable power projects,especially in less mature markets,are often hard to finance due to higher risks in the development and construction phases.This means that higher levels of equity financing,as well as public spending and/or concessional support from developmen

216、t finance institutions(DFIs),are needed.Geothermal and hydropower projects,which have more specific geological and hydrological requirements for their successful development,have an additional risk phase during the exploration and scoping Clean energy investment for development in Africa Chapter 3:T

217、he electricity sector PAGE|30 IEA.CC BY 4.0.that is greater than that required for wind and solar.Hydropower projects also require long due diligence,permitting and environmental licensing procedures.This can present a major hurdle,particularly for large projects such as the proposed Grand Inga Dam

218、project in the Democratic Republic of the Congo,which has been stalled for years due to its large scale(40 GW)and the associated need for both transmission works and cross-border agreements,as well as ongoing discussions regarding its potential environmental impact.Many African countries still rely

219、on concessional support for the development of their large renewable projects.As a result of the limited availability of concessional finance,investment in such projects has so far been concentrated in countries with access to commercial capital due to their broader access to finance(Figure 3.3).The

220、re is a need to increase the amount of funding to lower-income countries,accompanied by support to strengthen the regulatory environment and build institutional and technical capacity within these countries.There are signs of progress here;for example,lower-income countries are seeing a shift from l

221、icensed schemes to competitive bidding,which accounted for 20%of renewables projects in 2017-2018,rising to 90%in 2019-2021.Programmes such as the African Development Bank(AfDB)Desert to Power Initiative,which began working with five countries in the Sahel and is now entering a second phase in East

222、Africa,demonstrate the value of a co-ordinated approach that includes working with governments on national sector roadmaps,as well as supporting individual projects through viability gap funding.Figure 3.3 Clean power project financing by ability to access commercial capital in Africa,2017-2022 IEA.

223、CC BY 4.0.Renewable power investments are concentrated in larger economies with greater access to commercial capital,with poorer countries forced to rely on limited concessional capital finance Note:MER=market exchange rate;PV=photovoltaics.Sources:IEA analysis based on IJ Global and WB PPI.10203040

224、 5 10 15 202017-20182019-20202021-20222017-20182019-20202021-2022HydropowerGrids andstorageWindSolar PVRenewablescapacity(right axis)Billion USD(2022,MER)Countries reliant on concessional capitalCountries with access to commerical financeGWClean energy investment for development in Africa Chapter 3:

225、The electricity sector PAGE|31 IEA.CC BY 4.0.In more developed African countries,especially those with strong renewables-related regulations and existing projects,a major barrier to their widespread adoption is concern over non-payment of offtake agreements(electricity supply contracts).Aside from c

226、ultivating a reliable,paying customer base to buy this energy,other measures can help overcome this risk.These include measures that ensure utilities are not over-contracted for energy that will not get used,such as the creation of realistic integrated resource plans with clear capacity targets by t

227、echnology type.It can also be improved through contract structures that assume some of the offtake risk,which includes introducing independent power producer frameworks and power purchase agreements(PPAs)which have contracts that have the governments or international development financiers absorb so

228、me of the repayment risk.Still,regulators must also ensure that risks are shared in a balanced way between sellers and purchasers of electricity to avoid putting too much risk on utility off-takers and government backstops,many of whom are already in financial difficulty.Greater transparency around

229、financial terms,including any de-risking or credit enhancements provided by DFIs,can help in this regard.Once countries already have a developed market for renewables projects,the pipeline of new projects can rely increasingly on commercial debt with partial assistance from the public sector,even in

230、 the development and construction phases.This opens the country up to a larger pool of capital providers while also freeing up DFI or donor capital to invest in more nascent markets.It also creates opportunities to refinance projects,allowing concessional finance providers to exit the investment and

231、 be replaced by private investors.For example,the 380 MW Benban Solar Park project in Egypt was originally funded with equity from the private sector and debt solely from multilateral development banks(MDBs).In April 2022,Scatec and its partners refinanced the non-recourse project debt through the i

232、ssuance of a 19-year,USD 335 million green project bond.This transaction the first of its kind in Africa reduced the projects financial costs over its lifetime while freeing up MDB capital to reinvest elsewhere.Distributed renewable power for businesses African grids are prone to frequent power outa

233、ges.As a result,many end users,ranging from small and medium-sized enterprises(SMEs)and smallholder farmers through to large commercial and industrial firms,are forced to operate diesel generators as a backup.In recent years,as the cost of solar PV modules has fallen and diesel prices have risen,the

234、 market for distributed solar PV supplied to businesses has grown.Projects to supply distributed solar power are generally financed on the consumers own balance sheet or via off-balance sheet arrangements,such as third-party ownership supported by corporate PPAs.In the latter case,the end Clean ener

235、gy investment for development in Africa Chapter 3:The electricity sector PAGE|32 IEA.CC BY 4.0.user is often a creditworthy business,but such third-party arrangements are also suited to cash-constrained companies,including SMEs.Most distributed solar and battery systems sold under these arrangements

236、 have,to date,been concentrated in Egypt,Nigeria and South Africa.However,projects with similar arrangements are planned or are underway in at least 12 other countries across the continent.National policies,particularly around third-party ownership,interactions with utility distribution and billing

237、systems,and tax exemptions for importing solar equipment,will play an important role in supporting the further growth of the distributed solar PV market in these applications,to reduce risks to subsequent grid investments undermining the project economics of these systems.Grids and storage Public ut

238、ilities will need to be responsible for much of the investment in upgrading electricity systems across the African continent,accounting for 80%of grid investment in 2030 in the SAS.This is a daunting prospect given their perilous financial state today.Poor payment collection rates,illegal connection

239、s,cost increases(including the cost of capital),operational problems and supply chain constraints are reducing cash flows and driving up debt in many countries,especially in sub-Saharan Africa.Private sector financing will therefore need to take on a larger role,although this is likely to be limited

240、 to countries that have relatively well-developed power systems,a stable regulatory environment and the legal frameworks in place to allow for private sector participation in their power sector.In addition to providing new sources of finance,private operators generally outperform their public counte

241、rparts across a range of technical and commercial indicators.Nonetheless,it is important that moves to open up transmission and distribution are accompanied by strong regulation,in part to ensure that private operators invest in less-profitable areas such as the electrification of rural areas.In man

242、y countries,boosting private investment requires authorising their participation,whether through the use of concession agreements or other regulatory carveouts for private sector investment and ownership,which should be accompanied by auctions and competitive tenders to ensure these processes are ma

243、naged fairly and efficiently.Although private participation in generation in Africa has been increasing gradually in recent years,with over half of African countries now allowing it,private operators of both transmission and distribution assets are present in only three countries Cte dIvoire,Gabon,a

244、nd Zambia.Several other countries are exploring ways to open networks to private investors,but public concessional finance is likely to be necessary to derisk projects,particularly in the early stages.For example,Gridworks,an investment platform owned by the DFI British International Investment,is w

245、orking with the Ugandan government on a pilot for private investment in transmission,while the Kenyan Clean energy investment for development in Africa Chapter 3:The electricity sector PAGE|33 IEA.CC BY 4.0.government signed an agreement with Indias POWERGRID in 2022 to create Africas first independ

246、ent power transmission project.Digitalisation,including outage management systems and smart metering,accounts for a small share of total grid investment in the SAS but makes a disproportionately large contribution to reducing network losses,particularly non-technical(mainly due to poor collection ra

247、tes and theft).These losses were estimated to cost African utilities in total around USD 15 billion in 2020 alone.Several countries have already begun piloting these measures,notably smart metering(Benin,Kenya),smart substations(Senegal,Democratic Republic of the Congo),fibre optic communication add

248、ed to transmission lines(Ethiopia,Kenya)and the use of thermal-based tools with drones to support routine inspection of hotspots on the grid(Ghana,Kenya).Much of this investment is likely to occur via public utilities,but it can also be supported by the private sector,where their participation in el

249、ectricity networks is permitted.Robust planning to signal to the market that there is a strong pipeline of potential projects is necessary to attract private investors.Clean energy investment for development in Africa Chapter 4:Emerging industries PAGE|34 IEA.CC BY 4.0.Chapter 4.Emerging industries

250、Key targets and investment needs As in the rest of the world,an emerging set of industries based on various energy technologies will need to play an increasingly important role in Africa over the coming decades as the energy transition advances.They include the mining and processing of critical mine

251、rals;the production of low-emissions steel and cement;the production of hydrogen and hydrogen-based fuels;and the manufacturing of clean technologies such as vehicle batteries,solar PV panels,wind turbines,heat pumps,fuel cells and electrolysers.For now,Africa has a significant presence only in the

252、mining of critical minerals,notably cobalt,platinum group metals(PGMs),manganese and copper.However,some parts of Africa have effectively parlayed their low-emissions power mix,growing workforce,and competitive costs into attracting new investment in related industries,such as in Egypt,Kenya and Mor

253、occo.Within the broader context of Africas growing industries,including in steel,cement,textiles,paper and agriculture,industrial energy demand growth can be seen as an opportunity anchoring new energy infrastructure on these clients as reliable,paying sources of demand.Productive uses the grouping

254、to describe energy use linked to economic activity made up nearly half of the growth in electricity demand in Africa over the last ten years,and pay two-thirds of Africas electricity bills,despite only making up just over half of Africas electricity demand.This section explores opportunities to deve

255、lop these new industries with an eye for how their development supports African and global energy objectives.Critical minerals Expanding the extraction of critical minerals to meet rapidly growing global demand represents an enormous economic opportunity for Africa.Production of mineral resources is

256、 already a vital source of income for Africa,representing around 8%of government revenues in resourcerich African countries.In 23 African countries,minerals represent over 30%of total product exports.The mining sector has also been one of the main recipients of foreign direct investment in the regio

257、n.Several African countries are endowed with large mineral resources,many of which are critical to various clean energy technologies.For some minerals such as cobalt,PGMs and manganese,the region is already a major supplier to the global market(Figure 4.1),as reiterated also in the IEAs latest repor

258、t Global Critical Minerals Outlook 2024.The Democratic Republic of the Congo accounts for about 70%of global cobalt production,though only a small amount is Clean energy investment for development in Africa Chapter 4:Emerging industries PAGE|35 IEA.CC BY 4.0.processed in the country(the bulk of it i

259、s exported to China for processing).It is also Africas leading producer of copper and among the top five producers worldwide,and could be among the top three in 2030.South Africa dominates global supplies of PGMs and is also a leading producer of chromium and manganese.There are also substantial unt

260、apped resources of other minerals such as lithium and nickel.Africas lithium mining is expanding,led by Zimbabwe,with planned projects in Ethiopia,Mali,Namibia,the DRC,and Ghana,potentially boosting production to 53-70 kt by 2030,despite possible delays from price volatility.The continent also holds

261、 a sizeable share in the production of other mineral resources such as bauxite and graphite(such as in Uganda).Figure 4.1 Share of African global production of selected minerals,2023 IEA.CC BY 4.0.Africa is already a major producer of key critical minerals today,holding in some cases more than half

262、of known global reserves Notes:DRC=Democratic Republic of the Congo.Anticipated supply includes existing production and that from projects that are currently planned or under construction.Source:IEA(2022),Africa Energy Outlook 2022.The extraction of critical and other minerals needed for clean energ

263、y technologies across the continent is expected to grow strongly in the coming years,especially cobalt,led by the Democratic Republic of the Congo and Zambia.Revenues from copper and key battery metals production in Africa are already estimated at over USD 20 billion annually,and the current pipelin

264、e would imply a 65%increase in market value by 2030.There is enormous potential for expanding output as global demand for those minerals soars in parallel with that for clean energy technologies,which will be outlined in the IEAs upcoming Critical Minerals Security Mechanisms Research Study.This exp

265、ansion will require large-scale investments in mines as well as a range of supporting infrastructure such as ports,roads,railways and power supply.20%40%60%80%100%CopperBauxiteChromiumPlatinumGraphiteManganeseCobaltDRCMoroccoSouth AfricaMozambiqueMadagascarGabonGhanaCte dIvoireGuineaZambiaZimbabweSh

266、are of reservesBatteriesOther low-emissions technologiesClean energy investment for development in Africa Chapter 4:Emerging industries PAGE|36 IEA.CC BY 4.0.Improving the quality of geological surveys to gain a better understanding of the resource potential,robust governance,transparent regulatory

267、frameworks and adequate incentives will also be needed to stimulate investment.All of this necessitates the strengthening of the capacity of local authorities to design,monitor and regulate resource developments and processing,as well as transparent mineral wealth management systems to translate min

268、ing revenues into widespread economic prosperity and use them to support the diversification of the economy.The environmental and social effects of exploiting mineral resources also need to be managed carefully,both to protect local communities and to gain public acceptance for future projects.Steel

269、 and cement While almost 20%of the global population resides in Africa,in 2022 the continent accounted for just over 5%of global cement production and 1%of global steel production,almost a third of which is from scrap-based electric arc furnace.In the Sustainable Africa Scenario(SAS),economic develo

270、pment drives up building and infrastructure needs greatly on the continent,with Africa set to build more floor area by 2030 than currently exists in Japan and Korea.This drives up the demand for steel and cement on the continent considerably,with steel production growing by over 40%and cement produc

271、tion increasing by almost 35%by 2030(Figure 4.2)to meet the rising demand.Increasing the production of these products in Africa could bring a suite of benefits for African countries,such as reducing import dependency for steel,increasing the security of supply and creating employment opportunities.F

272、igure 4.2 Steel and cement production in Africa in the Sustainable Africa Scenario,2022-2050 IEA.CC BY 4.0.Driven by economic development,steel and cement production increase rapidly to meet rising demand for infrastructure 2022203020402050 0.5 1.0 1.5 2.0 2.5 3.0SteelCementMaterial production(index

273、ed to 2022)Clean energy investment for development in Africa Chapter 4:Emerging industries PAGE|37 IEA.CC BY 4.0.The production of steel and cement is currently dominated by emissions-intensive processes which rely on fossil fuels.While there is limited production of low-emissions steel and cement i

274、n Africa,there are a few plans to invest in these sectors in the foreseeable future,such as in Mauritania and South Africa for steel and Ghana for cement.While decarbonising steel and cement production is important to avoid locking in emissions-intensive assets for decades,meeting the rising product

275、ion demand for steel and cement via low-emissions technologies in the near term is challenging,as these technologies have higher upfront costs and are not yet demonstrated at scale.For example,in 2030 steel production pathways based on low-emissions hydrogen are expected to be considerably more cost

276、ly than those of natural gas.As new production expands in Africa,there are opportunities,however,to ensure the latest steel and cement production developed is as efficient and future-proof as possible.For steel production,for instance,the emissions intensity of natural gas-based direct reduced iron-

277、electric arc furnace(DRI-EAF)routes is less than half that of coal-based routes,such as blast furnace-basic oxygen furnace(BF-BOF)and coal-based DRI-EAF(Figure 4.3).Additionally,gas-based DRI processes can be more easily shifted to low-emissions hydrogen without substantial retrofits.Such an approac

278、h has been adopted by countries such as Uganda,which through its recently drafted Energy Transition Plan is planning to focus all new steel-producing plants on using natural gas instead of coal by the end of this decade.While serving domestic markets and reducing import dependency should be the prio

279、rity,for countries with good iron ore and low-emissions hydrogen resources,there could be opportunities to export higher-value products like low-emissions steel to foster economic growth.In Namibia,for example,German developers are exploring a novel technology to produce low-emissions iron(the precu

280、rsor of steel)using renewable energy,while in Mauritania,ArcelorMittal is evaluating the potential to develop a DRI production plant that would take advantage of Mauritanias potential for renewable electricity generation and low-emissions hydrogen production.Foreign offtake can also help enhance the

281、 creditworthiness of the project and help lower the cost of capital for such projects.Clean energy investment for development in Africa Chapter 4:Emerging industries PAGE|38 IEA.CC BY 4.0.Figure 4.3 Global average direct and indirect emissions intensities in crude steel production via key decarbonis

282、ation pathways IEA.CC BY 4.0.In 2030,the emissions intensity of natural gas-based DRI production routes is more than half of that of coal-based routes.By 2050,hydrogen-based DRI process create opportunities for net zero emissions crude steel production Notes:PCI BF-BOF=blast furnace-basic oxygen fur

283、nace with pulverised coal injection;DRI-EAF=direct reduced iron-electric arc furnace;H2=hydrogen-based;NG=natural gas-based;Scrap EAF=scrap-based electric arc furnace.All process routes use zero scrap,apart from the Scrap EAF route,which uses 100%scrap.Source:IEA(2022),Achieving Net Zero Heavy Indus

284、try Sectors in G7 Members.For cement production,combustion emissions account for around 30-40%of total emissions,while process emissions the more difficult to abate account for the remainder.Today,much of Africas cement production uses biomass residues along with coal and oil products to manage seas

285、onal availability of biomass.Developing more stable biomass stocks,and firing with gas,for instance,can be cheaper and reduce emissions.Reducing the clinker content through substitution with alternative materials,such as calcined clay,can also reduce process emissions.To fully decarbonise cement pro

286、duction,carbon capture,utilisation and storage(CCUS)technologies are needed to capture CO2 process emissions.While CCUS technologies are currently not economically feasible for facilities in Africa,the technology could create opportunities for carbon credit purchases to finance projects,particularly

287、 given that power systems in Africa have historically had a significant amount of underutilised capacity and a high share of renewables.Low-emissions hydrogen It is a similar picture regarding the production of low-emissions hydrogen and hydrogen-based fuels such as ammonia,which are globally at a v

288、ery nascent 1 0002 0003 0002020 2030 20502020 2030 20502020 2030 20502020 2030 2050Indirect emissions(electricity)Indirect emissions(fossil fuel and raw material supply)kg CO2-eq/t crude steelPCI BF-BOFNG DRI-EAFH2 DRI-EAFScrap EAFNet zero emissions Direct emissionsClean energy investment for develo

289、pment in Africa Chapter 4:Emerging industries PAGE|39 IEA.CC BY 4.0.stage of development.Todays most common applications for low-emissions hydrogen include fertiliser production and oil refining,as well as use of ammonia-based fuels in shipping and ammonia-blending with coal in electricity generatio

290、n.In principle,Africa is well-placed to develop a hydrogen industry given its large potential wind and solar resources(Figure 4.4),and low-emissions hydrogen production from announced electrolyser projects in Africa could reach 2 Mt by 2030 if all projects come to fruition.However,this would require

291、 massive investment in production and export facilities,as well as in renewablesbased electricity production,power grids,seawater desalination and CO2 transport and storage.However,some models,such as the project being developed in Namibia,are exploring how a firm hydrogen offtake agreement could lo

292、wer risk and financing costs for accompanying renewable energy investments and could allow for overbuilding these projects to supply power to the broader grid.Figure 4.4 Delivered costs of low-emissions hydrogen from selected producer regions delivered to Northern Europe,2030 IEA.CC BY 4.0.Africa ha

293、s potential to export low-emissions hydrogen,especially as ammonia,produced from renewable electricity to demand centres in Europe at competitive prices Notes:H2=hydrogen;LH2=liquefied hydrogen;NH3=ammonia;RE=renewable energy;NG=natural gas;CCS=carbon capture and storage.Source:IEA(2023),Financing C

294、lean Energy in Africa.Clean technologies manufacturing As of today,Africa is a very minor player in the manufacturing of clean energy technologies,which is dominated by China and,to a lesser extent,North America and Europe.African countries rely heavily on imports for some key clean technology,such

295、as solar home systems an essential technology for achieving universal access to electricity(see Chapter 2).To help make them affordable,they 1 2 3 4 5LH NH LH NHLH NHLH NHNHLH NHNHHHHUSD(2020)/kg HProduction(RE)Production(NG+CCS)ConversionImport/export terminalsTransportReconversionNorth AfricaSouth

296、ern AfricaNorthern EuropeMiddle EastAustraliaSouthern EuropeClean energy investment for development in Africa Chapter 4:Emerging industries PAGE|40 IEA.CC BY 4.0.are typically exempt from duties and valueadded tax,but this measure undermines efforts to nurture domestic production.Most African compan

297、ies involved in producing solar home systems focus on the assembly of batteries and PV panels,which are no longer produced on the continent.A few companies pioneered production of solar panels as early as 2011 in Kenya and 2012 in South Africa but have since turned away from manufacturing to focus o

298、n distributing panels in partnership with Southeast Asian manufacturers.However,there are plans to build new production facilities,such as in Burkina Faso.In 2022,the Democratic Republic of the Congo and Zambia set up a common governance structure the DRCZambia Battery Council to create a business e

299、nvironment conducive to the development of a battery value chain based on their indigenous critical mineral resources.Clean cooking equipment and fuels also face similar challenges.Often exempted from tariffs to help manage affordability,increasingly domestic efforts are focusing on developing local

300、 manufacturing of stoves and developing strong local supply chains,as is the case with Burn Manufacturing,which is expanding its stove manufacturing facilities to other countries in Africa.Expanding manufacturing centres to meet domestic demand would require major investments in energy,transport and

301、 digital infrastructure.Dedicated industrial parks with reliable and affordable supplies of energy and other services can be a way to attract anchor industries.The reliability of electricity supply is particularly important to attract industry,increase productivity,reduce costs and cut emissions;man

302、y African manufacturers currently rely on inefficient diesel or gasoline generators to provide backup power.Productive activities Other productive activities,including light industry,commercial businesses and agriculture,are set to demand more energy,and can also be the target of modernisation effor

303、ts that could switch processes to electricity.Industry in total currently accounts for twothirds of energy demand for productive uses,with services(commercial and public buildings,and desalination)contributing a quarter and agriculture less than onetenth.Total energy consumption for productive uses

304、across Africa rises by a quarter over 20232030 in the SAS,with the use of almost all major fuels increasing in all three productive sectors.This growth can be directed increasingly towards electricity,with the right measures in place to keep electricity rates affordable,improve reliability and addre

305、ss the upfront investment hurdles for many of the small and medium-sized enterprises that would be making these investments.Key productive uses where the right policies could drive greater electrification include switching irrigation pumps from diesel to pumps powered by solar and batteries;expandin

306、g cold Clean energy investment for development in Africa Chapter 4:Emerging industries PAGE|41 IEA.CC BY 4.0.chains to allow for safe,hygienic transportation of agricultural products to urban centres;data centres;and industries such as paper and textiles.Support would be needed from financing instit

307、utions to address the high upfront costs of these modernisation efforts,even if the most efficient,modern and sustainable options are lower-cost over their lifetime.Many productive uses demonstrate a higher ability to pay for electricity and can improve the economics of the overall power sector.Many

308、 industries will also continue to rely on biomass,notably brickmaking,paper and pulp,food processing,and textiles,given the ample supply of biomass waste.Local authorities can assist in ensuring a continuous supply of biomass and waste to industrial plants,but also developing reliable supply chains

309、for other modern fuels needed when by-products are unavailable.This can help reduce pressure to use other unsustainably harvested biomass,including wood and charcoal.Ethiopia,Morocco and Rwanda have implemented policies that support industrial growth using more sustainable technologies.Financing veh

310、icles and mechanisms Stimulating investment in emerging energy industries in Africa,as well as stimulating the growth of clean tech demand,calls for both broad economic reforms to create a more attractive business environment for private investors and a change in the way projects are financed,in par

311、ticular through the greater use of concessional finance and new financial instruments such as climate finance.The main constraint to financing now is not the supply of private finance,but rather the absence of bankable projects,in turn caused by the absence of a robust policy and regulatory framewor

312、k,policy predictability and a strong political commitment to an announced energy transition pathway.Deep-seated economic policy reforms must,therefore,be the first step in the process of attempting to secure investment in these industries.Economic development in Africa is gradually driving up the po

313、ol of available domestic capital,but most domestic financial markets remain underdeveloped and illequipped to channel this capital into emerging clean energy projects,while foreign investors are in many cases discouraged by excessive country and project risk.Mobilising private capital to support inv

314、estments in emerging industries will,therefore,often rely on bilaterally negotiated agreements with international partners,of which government partners could bring concessional and climate finance to bear,especially in the near term for clean technology and access-related manufacturing investments,c

315、ritical mineral processing,and projects that can demonstrate clear emissions reductions(Table 4.1).This calls for the expansion of existing financing instruments and the introduction of new ones,as well as innovations in establishing efficient platforms and partnerships.By contrast,mining projects a

316、re likely to continue to depend on equity finance at the Clean energy investment for development in Africa Chapter 4:Emerging industries PAGE|42 IEA.CC BY 4.0.exploration and development/construction phase and on corporate cash flow for operations.Securing foreign demand for large low-emissions hydr

317、ogen projects will be necessary initially to provide the stable revenue stream needed to mobilise investors at the necessary scale.As with investments in the electricity sector and related to extending energy access,concessional finance will undoubtedly need to play a major role in getting projects

318、in non-mining emerging energy sectors off the ground given the limited scope for debt financing.As these public and philanthropic funds are limited,they need to be used strategically to leverage high multiples of private funding and to support high-impact development projects where risks are too hig

319、h to attract sufficient capital from the private sector.Table 4.1 Common financing instruments for emerging energy industries by project stage Industry Development Construction Operation Critical minerals Equity of mining juniors and corporate cash flow Mining juniors acquired by majors and projects

320、 developed using corporate cash flow;equity from downstream offtake agreement Corporate cash flow Low-emissions hydrogen Government grants,Concessional debt from multilateral development banks Concessional and commercial debt,equity,grants,green/sustainable bonds Corporate cash flow Revenue from gov

321、ernment subsidies Steel and cement Corporate balance sheet Concessional debt Corporate cash flow Clean tech manufacturing Concessional equity Private equity/venture capital Concessional debt Corporate cash flow Notes:Mining juniors,often funded by speculative stock market investors,are small project

322、 development companies intervening in early development phases such as exploration and prefeasibility/feasibility studies,which are characterised by lower capital requirements and a higher level of risk,due to inherent geological incertitude,commodity price fluctuations and long lead times.Clean ene

323、rgy investment for development in Africa Chapter 5:Mobilising investment PAGE|43 IEA.CC BY 4.0.Chapter 5.Mobilising investment Creating a conducive investment ecosystem Many clean energy projects in Africa today especially in sub-Saharan countries rely on concessional funding,with development financ

324、e institutions(DFIs)among the largest energy investors on the continent.Yet the total investment this funding is mobilising is far from sufficient to meet the needs of the energy transition to put Africa onto a truly sustainable development path.There is an urgent need to step up this funding and ta

325、p into the range of sources of financing available for such projects on a much larger scale,in particular from private lenders.Enhanced commitments by donors and DFIs are an essential condition to scaling up clean energy investment,particularly in energy access projects,but they must be accompanied

326、by improvements to their existing delivery channels,changes to their business models to take a more active role in riskier early-stage project development,and a greater focus on how to mobilise more private investment.This is all the more pressing in the case of fragile and conflict-prone countries,

327、where other sources of capital are severely lacking.In parallel,host countries themselves have a role to improve the overall investment climate,lower the cost of private capital and encourage the development of local capital markets in order to attract more private capital.In the longer term,there w

328、ill be a growing need to secure financing from institutional investors for clean energy projects in the electricity sector and emerging energy industries via tools such as sustainable debt issuances.Private equity and venture capital will also need to play an important role in funding start-ups,incl

329、uding companies that are tackling energy access gaps or providing innovative solutions to develop local clean energy-related industries.And local banks and institutional investors will need to contribute more to clean energy projects as the transition advances.All this hinges on building the human a

330、nd institutional skills and capabilities in government,the energy sector and the local financial community.A set of high-level cross-cutting developmental objectives that governments(of both donor and host countries),DFIs and other providers of concessional capital should take into consideration in

331、financing clean energy projects in Africa are outlined below.The aim should be to encourage equitable African-driven investments that create lasting and inclusive social and economic developmental benefits.The types of technical and institutional capacity-building initiatives specific to the energy

332、sector that are needed to assist African countries in securing those investments are identified,and examples of successful programmes are provided.Clean energy investment for development in Africa Chapter 5:Mobilising investment PAGE|44 IEA.CC BY 4.0.Better leveraging public funds to attract private

333、 capital Concessional and blended finance Concessional finance will be critical to many types of clean energy investment,notably those related to energy access,the electricity sector and nascent energy industries.DFIs and philanthropies need to use it in ways that help to mobilise the maximum amount of private capital by de-risking investment through co-investment or blended finance.This finance i