On Friday November 10, 2023, the Climate Investment Funds (CIF) held a hybrid event on the theme of ‘Unlocking Opportunities for Private Sector Participation in Renewable Energy Integration’. Joseph Mouanda, Chief Evaluation Officer at IDEV, was invited to present evaluative knowledge on renewable energy projects from a recent evaluation of the African Development Bank’s (AfDB) support for renewable energy in the African continent.
Other presenters, from the host organization CIF, the U.S. Department of Energy’s National Renewable Energy Laboratory, the World Bank, and the World Resources Institute, gave their input on how countries can better engage and involve the private sector in their plans to roll-out renewable energy infrastructure.
Mouanda’s presentation centered on the enabling environment for private sector participation, giving examples and showcasing countries that had set up policies to encourage and facilitate private sector financing of renewable energy projects in Africa.
Mouanda shared the evidence from IDEV evaluations that point to strengthening policy dialogue, knowledge management, and investment platforms in the energy sector. These actions facilitate the drafting of documentation for national and international projects, thereby easing entry for the private sector. Through its Sustainable Energy Fund for Africa, (SEFA), the AfDB has provided technical assistance and capacity building to policymakers and regulators in countries such as Kenya, Tanzania, and Senegal, with successful outcomes for private sector engagement. Adding that it is important for countries to complement high-level strategies with concrete action plans, he gave the example of the South Africa Renewable Energy Independent Power Producers Procurement Program, which successfully met investor demands for predictability and clarity on procurement. In addition, the evaluation evidence points to the success of blended concessional finance for private investment in renewable energy grid infrastructure, adaptation, and integration. In this sense, Mouanda advocated for platforms that helped build effective partnerships in renewable energy. One successful example at the African Development Bank is the Africa Energy Marketplace (AEMP), a tri-partite model that brings governments, the private sector, and development partners together to crowd-in private-sector financing for projects in targeted countries.
Mouanda concluded with the need to ensure long-term sustainability of RE interventions advantages. He pointed out that the financial sustainability of the African Development Bank’s funded renewable energy interventions was threatened by the financial distress of power utilities. He emphasized that renewable energies require large upfront investments, and as such, are vulnerable to credit risk of their off takers in the long term.
The presentations were followed by discussions on avenues of uptake for private financial instruments and arrangements, such as transmissions service agreements, power purchase agreements, and competitive procurement mechanisms.
In speaking about the event, Mouanda noted it was “an effective means for development stakeholders in the energy sector to share emerging knowledge on large-scale renewable energy integration at the national and international level. IDEV actively promotes learning from evaluative evidence with the objective of improving development results at the African Development Bank and beyond.”
See the presentation here