A recent article by Fitch Solutions noted that decentralised solar systems would increase in Sub-Saharan Africa amid structural power market challenges.
According to the market research firm, low grid coverage and unreliability, as well as the lack of appropriate regulations, institutional frameworks, and policies for renewable growth in most SSA nations, are the main obstacles to fast-tracking the growth of solar in SSA.
Despite the region’s unfavourable conditions, there has been growth in interest of decentralised solar systems from private power providers. Fitch’s own forecast predicts seeing over 1200GW of new solar capacity come online between 2022 and 2031, while the Sub Sharan Africa (SSA) region will represent just below 1% of this growth, despite exhibiting excellent solar potential.
“While SSA does underperform on a global scale, the growth of solar capacity in the region will be the primary force driving growth in the region's non-hydropower renewables sector, accounting for 8.2% of growth between 2022 and 2031. The expansion will be largely credited to South Africa's extensive pipeline of solar projects. Additionally, South Africa has better grid access and high urbanisation rates with only 32.7% rural population.”
Fitch’s experts also suggest that Sub-Saharan Africa will create large opportunities for off-grid solar investments due to the high percentage of rural population.
According to the market research firm, the off-grid solar sector has seen major growth in the region, especially in Kenya.
In the past two years, the Kenya Off-Grid Solar Access Project (KOSAP) has provided just over half a million people with access to electricity through decentralised solar systems.
Ghana is also set to further grow off-grid solar, following the government signing a USD69.88mn financing agreement with the African Development Bank (ADB) to fund the implementation of a rural electrification project via decentralised solar systems.
From a more positive point of view, Fitch says that requests have been made for the COP27 leaders to create more concrete plans and procedures to boost financial and investment flows to developing nations to help them handle their difficulties with energy security and climate change. “We believe off-grid solar presents the most opportunities to address these challenges in raising money for grid access enhancements,” the firm’s analysis stated.
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