Financing renewable microgrids in Africa

Over the last decade, great progress has been made in furthering electricity access in Africa. However, the pace of electrification must accelerate to achieve full access to electricity by 2030. Microgrid financing plays a pivotal role in reaching this goal.

However, financing renewable microgrids entails a unique set of challenges that reflect the nature of providing electricity to underserved, often rural, communities in Africa. Microgrid developers need access to long-term, low-cost debt. However, local banks are often not familiar with the risks associated with off-grid renewable energy projects. This translates into higher interest rates and onerous collateral requirements which may leave little room for making these projects economically viable. International banks and financial institutions may be more familiar with renewables; however, their financial products often require developers to taken on debt in a foreign currency which they must service with income from local currency earnings. This leaves developers exposed to foreign exchange risk.

Despite these challenges, there are financial institutions and governments that are facilitating microgrid financing. Join a panel of seasoned experts to learn more about how they are mitigating challenges to microgrid financing.