The worrying decline in global investments in off-grid solar energy

This is worrying news for rural electrification professionals in Africa and around the world. The off-grid solar sector attracted very little investment globally in 2023. In fact, $425 million was invested last year, a decrease of 43% compared to 2022. This information is contained in the results of the World Off-Grid Lighting Association’s (GOGLA) Investment Database 2023.

This is also evident from the report, which was published on April 26 “The most significant decline occurred in the scale-up segment, raising concerns that macroeconomic conditions will push the sector even further away from its contribution to universal energy access by 2030.” This situation is particularly acute in Africa, where 600 million people still do not have access to electricity.

A financing requirement of $3 billion per year

The $425 million funding has been absorbed by 85 companies. of this financing “$281 million was provided in the form of debt, $128 million in equity and $15.5 million in grants,” says GOGLA. “The 2023 investment data shows that without more risk mitigation instruments and concessional financing, off-grid solar energy will not reach the scale needed to meet global development goals,” analyzes Laura Fortes, head of access to finance at GOGLA.

Also read- Solar energy: powered by South Africa, the continent will have deployed 3.7 GW by 2023

Currently, the world needs $3 billion in investments annually between now and 2030 to achieve Sustainable Development Goal 7 (SDG7) on universal access to clean energy. Yet off-grid solar energy is seen as an ideal solution to narrow the rural electrification gap in sub-Saharan Africa.

The impact of off-grid solar energy on electrification

One of the off-grid solutions available in Africa is the home solar energy system. This small-scale household electricity grid consists of one or more solar panels, inverters and batteries to store the electricity. The clean electricity stored in this way is redistributed to the domestic electricity grid on request at night or in bad weather.

There are also mini-grids, which can also be used to electrify rural areas. These are small photovoltaic solar power plants with electricity storage systems that use batteries or hybrids with generators. These facilities are equipped with small distribution networks that can supply a community or village.

In the Democratic Republic of Congo (DRC), the company Nuru is already implementing mini-grids that can cover entire cities, such as Goma in North Kivu province. Nigeria has opted for off-grid solar energy to electrify its rural areas through a project being implemented at the federal level and funded to the tune of $550 million by the African Development Bank (AfDB) and the World Bank. Such financial commitments are necessary to meet the challenge of electrification in Africa.

Jean-Marie Takouleu