Ihe solar energy economy has undergone a real revolution over the past decade. In 2010, the world had 44 gigawatts (GW) of installed solar photovoltaic capacity. Today, nearly 942 GW are deployed on the planet, an increase of more than 2,000% in just over ten years.
Driven by the spectacular fall in the price of technologies and by the need for new carbon-free electricity production capacities to fight against climate change, investments in solar should this year, for the first time in history, exceed those made implemented in fossil fuels, at a rate of just over a billion dollars (about 916 million euros) per day on average, according to a recent report by the International Energy Agency.
But in emerging countries, market forces can only drive down the cost of renewables up to a point. We therefore urgently need innovative international financing mechanisms to accelerate installations in the countries of the South and contribute to supplying the world with clean and sustainable energy.
Political or social unrest
More commercial capital must be invested in renewable energy projects in the countries of the South. These projects are capital-intensive and their developers in emerging countries often have to deal with high interest rates, because lenders perceive more risk in these regions than in richer countries.
These risks reflect factors such as uncertainty about compliance with power purchase agreements, or political or social unrest. To amplify deployments of renewable energy projects in the South, it is absolutely fundamental to reduce the perceived risk and therefore the cost of capital.
It is in Africa that we observe the greatest gap between the necessary investments and the reality of the deployment of renewable energies. The continent will need to double its generation capacity to 497 GW by 2030 to meet growing energy demand. Africa will need $70 billion in investment in the solar sector alone over the next five to seven years.
This objective will not be achieved if commercial capital is not mobilized. Traditional financial instruments, such as concessional debt (at preferential rates) and grants, are widely used on the continent, but remain insufficient compared to the needs. These concessional debts and subsidies could be deployed more effectively by targeting specific barriers to financing and, therefore, removing barriers to mobilizing commercial investment. This would significantly increase the volume of solar investments for a continent naturally endowed with immense potential.
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