Solar is a Cost Saver and a Hedge on Energy Prices for African Businesses

Solar is a cost saver and a hedge on energy prices for African businesses in 7 out of 15 Sub-Saharan markets

According to a Bloomberg New Energy Finance (BNEF) report, commissioned by Swiss Responsability Investments AG, the commercial and industrial (C&I) solar sector in Sub-Saharan Africa is growing as a combination of high electricity tariffs, falling PV prices and a lack of reliability in the grid. This phenomenon is spurring sales of on-site solar to business customers in Sub-Saharan Africa.

The study 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 (excluding South Africa).

According to 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 15 MW, 20 MW, and 7 MW respectively as of November 2018.

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