The African Development Bank (AFDB) has agreed to finance a program to support off-grid solar projects throughout Sub-Saharan Africa.
Overall, the international financial institution will devote $56 million to the program, $50 million as a guarantee facility and $6 million as funds for technical assistance, with the latter being granted by the European Fund for Sustainable Development.
The program, dubbed the DESCOs Financing Program, is expected to bring electricity to around 900,000 households corresponding to approximately 4.5 million people by 2025. In order to reach this target, about 45 MW of off-grid solar will need to be deployed.
The AFDB added it will also give critical technical guidance and credit enhancement to Distributed Energy Service Companies (DESCOs) operating in the region, helping them to address barriers to accessing finance. Currency and other financial risk mitigation instruments will be also facilitated, while financial inclusion will be promoted by making financing options available to customers in rural areas, building credit history, and supporting the uptake of mobile payment solutions, through the so-called pay-as you-go technologies.
“Innovations such as receivables-backed financing structures provided by the program are vital in the Bank’s efforts to unlock private sector participation and local currency financing for the energy sector,” said Wale Shonibare, AFDB's vice-president for power, energy, climate change, and green growth.
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Off-grid solar for 1 billion people without access to electricity
According to the report Strategic investments in off-grid energy access: Scaling the utility of the future for the last mile by analyst Wood Mackenzie Power & Renewables, around 400 million people have gained electricity access through off-grid solar between 2010 and 2017, by 2022, 740 million are expected to have joined that group.
The authors of the study stressed that there are currently around 1 billion people without access to electricity and 2 billion without reliable access, and that investment of $52 billion per year is needed to provide universal electricity access by 2030.
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They only plan an average of 10 watts per head? Say 5 people in a family, that’s still only 50 watts per household.
Going for such tiny non-standard installations raises costs per watt considerably. The standard mass-produced solar panel is at least 250 watts, today more likely 300. The dockside price in China for a basic poly module is 20 cents per watt, or $50 for a 250-watt panel. Say $70 in Mombasa. 50 watts may be enough for LED lights and phone chargers, but you need an order of magnitude more to cover other life-changing uses: TV, refrigerator, fan, well pump, power drill or saw, e-bike charger. The costs won’t go up 10 times, I suspect more like twice.