Falling investment hits off-grid solar power in Africa

A recent analysis of data from the Global Off-Grid Lighting Association (GOGL) reveals a worrying trend: investment in the off-grid solar energy sector slowed significantly worldwide in 2023. This news is worrying for rural electrification professionals, both in Africa and around the world.

According to the report released on April 26, the off-grid solar sector attracted only $425 million in investments in 2023, a significant 43% drop from the previous year. This decline is particularly pronounced in the scale-up segment, raising concerns about the sector's ability to contribute to universal energy access by 2030, as envisioned in the Sustainable Development Goals (SDGs).

This situation is even more worrying in Africa, where 600 million people continue to live without access to electricity. Investments in off-grid solar energy are essential to address this critical energy gap.

The Gogla report states that of the $425 million invested in 2023, the majority was allocated in the form of debt ($281 million), followed by equity ($128 million) and grants ($15.5 million). However, without more risk reduction instruments and concessional financing, the off-grid solar energy sector risks not reaching the scale necessary to meet global development goals.

Currently, the world needs approximately $3 billion in annual investment by 2030 to achieve SDG Goal 7 on universal access to clean energy. Off-grid solar power is widely considered an ideal solution to accelerate rural electrification in sub-Saharan Africa.

Distributed off-grid solutions in Africa include solar home systems and mini-grids. These infrastructures provide electricity to rural communities, providing opportunities for economic and social development.

Despite these challenges, positive initiatives are emerging in Africa, such as the deployment of mini-grids by companies like Nuru in the Democratic Republic of Congo and significant investments in Nigeria supported by institutions like the African Development Bank and the World Bank.

In the face of these challenges, increased financial commitment and favorable policies are essential to stimulate investments in off-grid solar energy in Africa and thus accelerate the electrification of rural areas, thereby contributing to the prosperity and well-being of populations.

THE EMISSARY