2023-09-06 11:35:22
ALGIERS – The International Energy Agency (IEA) highlighted in its latest report the need to improve access to capital and reduce financing costs to develop renewable energies in Africa, according to a press release published on its website web.
According to the report co-produced by the IEA and the African Development Bank (AfDB) Group released on Wednesday, “quick action to improve access to capital and ease financing costs is essential to unlock a flow of spending on clean energy in Africa”.
Even though Africa represents nearly 20% of the world’s population and has abundant resources, it is the destination of only regarding 2% of global expenditure on clean energy, points out the document entitled “The financing of energy unique to Africa”.
Overall investment in energy on the continent has struggled in recent years, the report continues, as to meet Africa’s development ambitions, as well as international targets for energy access. energy and climate, “it must more than double by 2030, of which almost two thirds must be devoted to clean energy”.
IEA and AfDB explain that a series of risks affecting projects in Africa, as well as higher borrowing costs following the Covid-19 pandemic, lead to the existence of “a limited pool” of capital energy investors in Africa can tap into.
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Moreover, the report points out, the cost of capital for large-scale clean energy projects on the continent is at least two to three times higher than in advanced economies.
“This prevents investors from embarking on commercially viable projects that might provide affordable energy solutions,” the report’s authors develop.
The report explores innovative ways to address this challenge, calling for more seed funding and the use of more risk-reducing tools to attract private capital.
“This will require strong commitment from the public and private sectors, as well as support from foreign and domestic institutions,” he said.
Providing modern energy to all Africans will require nearly $25 billion in expenditure per year until 2030, according to the report.
“This is a small sum in the context of global energy expenditure – equivalent to the investment needed to build one new LNG terminal per year. small scale, often in rural areas and for consumers with limited ability to pay,” the document points out.
For this, the IEA and the AfDB believe that the international community has “a major role” to play in increasing investment in clean energy in Africa.
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