A new report by BloombergNEF has found that a combination of high electricity tariffs, falling PV prices and a lack of reliability in the grid is spurring sales of onsite solar to business customers in Sub-Saharan Africa.

The report states 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.

BNEF found that onsite solar is cheaper than the electricity tariffs paid by commercial or industrial clients in seven out of 15 markets in Sub-Saharan Africa.

“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 15 MW, 20 MW and 7 MW respectively as of November 2018.”

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.

The report was commissioned by asset manager responsibility AG, in co-operation with the dedicated climate fund it manages, and the Swiss State Secretariat for Economic Affairs.

Antoine Prédour, head of energy debt at responsAbility, said: “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-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.
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Discover the latest innovations in solar in Africa at POWERGEN Africa and Africa Utility Week in Cape Town in May. Energy use in the C&I sector is a key focus of European Utility Week and POWERGEN Europe in November.