From Challenges to Solutions: The 2024 Africa Energy Expo Sparks a Renewed Push for Universal Electrification
The Africa Energy Expo and Leadership Summit, held in Kigali from November 4-6, 2024, concluded with renewed urgency and opportunity for Africa’s energy transformation.
The three-day event, organized by Informa Markets in collaboration with Rwanda’s Ministry of Infrastructure and the Rwanda Convention Bureau, focused on key themes such as universal electrification, particularly last-mile connectivity in remote areas, delivering innovative financing models, examining decentralized renewable energy, and discussing regional cooperation for accelerating universal electrification. It also explored green financing enhancements and paved the way for an African single electricity market.
Mr. Herbert RUBASHA, Managing Partner at MRB Attorneys, discussed innovative financing models to address challenges in Africa’s energy sector, particularly focusing on Rwanda’s efforts to develop green energy projects. He emphasized the importance of “de-risking” energy projects, which involves reducing financial risks to encourage investment in green energy.
Rubasha highlighted sustainability-linked loans (SLLs) as a key innovation in this context. Unlike traditional financing mechanisms like bank loans or power purchase agreements (PPAs), SLLs are specifically designed to finance green projects. These loans are distinct because they align financial incentives with sustainability goals, providing a mechanism for funding projects that contribute to environmental and social benefits.
“I think talking about sustainability-linked loans, one will have to first appreciate the fact that this is one of the innovations or one of the solutions that has been brought forward to respond to the issue of financing green energy projects. Of course, it is more or less apart from the traditional financing mechanisms that we are all aware of. I’m talking about the non-requests structure,” said Rubasha.
In Rwanda, the Rwanda Development Bank (BRD) pioneered the issuance of these bonds in response to the challenges of financing green projects. The legal and financial framework for these bonds follows international standards, particularly those set by the International Capital Market Association (ICMA) for green bonds. This ensures that the sustainability-linked loans issued are in line with global best practices and provide a clear structure for financing green initiatives.
Rubasha underscored that these innovative financial solutions represent an important step in overcoming barriers to funding Africa’s green energy transition, providing a model that other nations could follow.
Norman Moyo, CEO of GridAfrica, discussed the challenges and potential solutions for integrating Distributed Renewable Energy (DRE) into Africa’s grid during a panel on the topic. He emphasized that telecom towers across Africa are facing significant energy challenges due to power shortages and rising costs, which directly affect businesses, particularly in the telecom sector. Moyo argued that ensuring energy security is crucial, and the solution lies in developing energy solutions tailored for telecom infrastructure, including virtual grids and decentralized systems.
Drawing from his experience in the telecom industry, Moyo highlighted the transformative potential of decentralized energy solutions, similar to how mobile phones have spread across Africa, surpassing expectations by reaching 110% of the population. He advocates for a shift in mindset where every building in Africa becomes an energy-generating asset, with solar power on rooftops as a practical, low-cost solution. Solar can be up to four times cheaper than relying on generators or grid power in many countries.
“There is no reason why any roof in Africa should be gaining dust right now, every roof in Africa should be a smart roof, and every roof in Africa should be an energy-generating roof, that’s the minimum you can do because solar still is potentially the lowest cost of energy you can find in the continent today if you run a generator, it’s 45 US cents per kilowatt hour If you run solar, it’s 10 cents per kilowatt hour, even the grid in Rwanda is hovering around 20 cents per kilowatt hour, So when you put something on your roof, you have just halved your cost between 8 o’clock to 5 p.m. It’s a no-brainer, but the challenge is that I think there is a lack of awareness,” he stated.
Moyo also pointed out that awareness of the benefits of solar energy is lacking, which is a barrier to wider adoption. He stressed the importance of regulatory changes to allow distributed energy systems, like rooftop solar, to feed into the grid and support the energy transition. Additionally, he mentioned the importance of leveraging existing transmission infrastructure in Africa to integrate these decentralized systems into the grid.
In conclusion, Moyo called for greater collaboration between the private sector and regulators to create a conducive environment for renewable energy adoption, which would lead to a significant acceleration in the rollout of renewable energy solutions across the continent.
