1. Financial de-risking to unlock Africa's renewable energy potential
- Author
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Bart Sweerts, Bob van der Zwaan, Francesco Dalla Longa, and Sustainable Chemistry Energy (HIMS, FNWI)
- Subjects
Risk reductions ,Renewable energy ,Energy Efficiency ,020209 energy ,Energy / Geological Survey Netherlands ,02 engineering and technology ,Environment ,7. Clean energy ,0202 electrical engineering, electronic engineering, information engineering ,Climate change ,Cost of electricity by source ,Finance ,Renewable Energy, Sustainability and the Environment ,business.industry ,Photovoltaic system ,1. No poverty ,Electricity generation ,13. Climate action ,Greenhouse gas ,Africa ,Position (finance) ,business ,Efficient energy use ,Renewable resource - Abstract
African countries are in a unique position to reap thesocio-economic and environmental benefitsofrenewable resourcesas a means for meeting increasing energy demand in a sustainable way. A critical obstacle for the deployment ofrenewable energy technologiesin Africa is the difficulty of attracting sufficient and affordable finance. This paper compares the impact of financial conditions on the cost of electricity generation across six renewable and three fossil-based technologies in 46 African countries. The results show large cost variations and highlight the extent to which renewables are disadvantaged by current financial practices. The energy-economy-environment model TIAM-ECN is used to show how lowering financing costs results in a much higher deployment of renewables. For example, solar PV could account for 10–15% of total electricity generation by 2050, even without explicit climate policy, thanks to financial de-risking programmes. The results demonstrate that changes in financing schemes could outweigh the impact of technology learning. This paper also demonstrates that, once ambitious climate policies are in place, reducing financing costs for renewables could be an efficient way to lowergreenhouse gas emissions. Financial de-risking is thus a key ingredient for unlocking the renewable energy potential in Africa.
- Published
- 2019