Price and need for reliable electricity are spurring solar sales to businesses

Commercial and industrial solar presents economic opportunity in Sub-Saharan Africa

January 20194 min read

Zurich and London, 24 January 2019 — A combination of high electricity tariffs, falling PV prices and a lack of reliability in the grid is spurring sales of on-site solar to business customers in Sub-Saharan Africa. This is the conclusion of a new report by research company BloombergNEF (BNEF), commissioned by responsAbility Investments, assessing the potential of commercial and industrial solar opportunities in the region.

The report entitled “Solar for Businesses in Sub-Saharan Africa” finds that the commercial and industrial (C&I) solar sector in Sub-Saharan Africa is growing not because of regulatory support – as has been the case in many developed economies – but because of economics. On-site solar power is cheaper than the electricity tariffs paid by commercial or industrial clients in 7 out of 15 markets in Sub-Saharan Africa studied by BNEF.

“While the market is still small, it has great potential,” explained co-author Takehiro Kawahara, lead frontier power analyst at BNEF. “An immense energy deficit and crumbling infrastructure makes Sub-Saharan Africa fertile ground for solar. As of November 2018, developers built a record number of 74 MW serving business customers directly, offering them cheaper power than the grid. Kenya, Nigeria, and Ghana installed 15MW, 20MW, and 7MW respectively as of November 2018.”

Source: BloombergNEF, IEA. Note: a market is considered economically viable for C&I solar if both commercial and industrial electricity tariffs exceed BNEF’s cost estimate for C&I solar in the region.

According to the authors, the financial sector has yet to take on a major role in providing funding for C&I solar systems. So far, most business customers have bought systems for cash, without using third-party finance. There are, however, big opportunities for specialized financiers in the region to do more.

responsAbility-managed funds have financed the off-grid solar sector in Sub-Saharan Africa for five years, focusing primarily on residential customers. The company expects solar to be increasingly deployed on C&I sites, where it often complements diesel power generation. 

Antoine Prédour, Head of Energy Debt at responsAbility, underlined: “Electricity outages are commonplace across most of Sub-Saharan Africa. When the grid is out, customers must either shoulder high opportunity costs from lost sales or manufacturing output, or resort to much costlier backup power, usually from diesel. This is where financing solar installations can contribute to climate change mitigation by replacing fossil fuel.”

responsAbility, in cooperation with the dedicated climate fund it manages, and the Swiss State Secretariat for Economic Affairs (SECO), commissioned BNEF to identify and assess potential target markets for C&I solar in Sub-Saharan Africa. Following a desk-based regional study that identified three high-priority markets, BNEF conducted interviews with 36 stakeholders in those markets. Overall, stakeholders are optimistic about the future and BNEF expects 2019 to be a record year for the C&I industry.

The report can be downloaded from here.

Contacts Stacy Fiehler responsAbility Investments AG +41 44 403 06 86 stacy.fiehler@responsAbility.com

BloombergNEF Veronika Henze vhenze@bloomberg.net +1-646-324-1596

About BloombergNEF (about.bnef.com) BloombergNEF (BNEF) is a leading provider of primary research on clean energy, advanced transport, digital industry, innovative materials, and commodities. With a team of experts spread across six continents, BNEF leverages the world’s most sophisticated data sets to create clear perspectives and in-depth forecasts that frame the financial, economic and policy implications of industry-transforming trends and technologies. Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day. 

About responsAbility Investments AG (www.responsability.com) A leading asset manager for impact investments in emerging economies, responsAbility manages USD 3 bn of assets through a variety of investment vehicles that provide private debt and private equity to some 540 companies with inclusive business models across 90 countries. Founded in 2003, the company is headquartered in Zurich, Switzerland, and has local offices in Bangkok, Geneva, Hong Kong, Lima, Luxembourg, Mumbai, Nairobi, Oslo and Paris. 

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This information was produced by responsAbility Investments AG together with its partners to the best of its knowledge and belief. However, responsAbility Investments AG provides no guarantee with regards to its content and completeness and does not accept any liability for losses which might arise from making use of this information. The opinions expressed in this information material are those of responsAbility Investments AG at the time of writing and are subject to change at any time without notice. If nothing is indicated to the contrary, all figures are unaudited. This material is provided for information purposes only. It does not constitute an offer or a recommendation to buy or sell financial instruments or services and does not release the recipient from exercising his/her own judgment. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law.

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