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News, 8/16/2017

Space for Finnish companies in the renewable energy markets of Africa

More than 180 million people in eastern and southern Africa live without energy. According to a recent study, the region's renewable energy markets offer both risks and significant opportunities.

Last week, the Ministry for Foreign Affairs released a report on the market potential for renewable energy in eastern and southern African countries. The report covered 15 countries, which will also be included in the next stage of the Energy and Environment Partnership EEP initiated by Finland.

The purpose of the survey was to review the energy development challenges facing African countries and how the challenges could be met through development cooperation and private sector participation. The survey was carried out by Danish Energy Management, a Danish energy consultancy firm.

Ensuring universal access to energy by the year 2030 is one of the goals set out in the 2030 Agenda for Sustainable Development. This is an enormous task because according to the report, in eastern and southern Africa alone there are more than 180 million people without energy. Only 22 per cent of rural residents have access to electricity. Drought and uncertainty of energy imports add to the problems.

Solar power brings electricity to Kenyan countryside. Photo: Juho Paavola
Solar power brings electricity to Kenyan countryside. Photo: Juho Paavola

In southern and eastern African countries, the focus is still on expanding the power grid even though achieving the energy goal would require novel solutions that do not involve the national grid. Achieving the goal would also require more extensive participation of private sector actors.

According to Jan Koivu, who works as Programme Officer in the South Africa Team of the Department for Africa and the Middle East of the Ministry for Foreign Affairs, the biggest challenge to attracting businesses is that the sparsely populated rural areas of Africa are usually also the poorest regions.

“If people cannot afford paying for energy, there may not be any basis for profitable business either. "

The survey, which was funded by Finland, the Austrian Development Agency ADA, and the UK Department for International Development DFID, is part of the process of setting up a new renewable energy fund. The fund, which will start operations in early 2018, will provide grants to companies and other actors for renewable energy projects in the target areas. The fund will the responsibility of the Nordic Development Fund NDF and Finland's contribution comes from its development cooperation funding.

Plenty of funding available

Even though the renewable energy market in the regions covered by the survey involves risks, it also offers huge customer potential. Koivu adds that companies can also obtain development funding and support from a broad range of different sources.

The governments of the countries in question are also committed to promoting renewable energy solutions even though their record has been mixed.

So far, Finnish companies have played a fairly modest role in the projects supported by EEP. Koivu believes that Finnish companies could offer more to the renewable energy markets in Africa.

In his view, there should be a better mix of reliable technical solutions and funding.

“Finland has top-level technological know-how and excellent products. I believe that Finnish engineers know how to tune their products in accordance with different countries’ requirements.”

Energy creates a basis for new business

Creating jobs for young people and women in particular is an important part of the EEP programme. According to the survey, the EEP programme is well placed to promote this goal and it can do this by encouraging partnerships with local companies and by supporting communities and non-governmental organisations.

“The energy produced through this effort allows women to set up new business requiring electricity, whether it is a kiosk or a market stall”, explains Koivu.

 The EEP programme, which has been supported by Finland since 2010, promotes the use of renewable energy in eastern and southern African countries. Promoting the use of modern, reliable and affordable energy solutions helps to ensure better access to electricity, reduce poverty and alleviate the impacts of climate change. About 225 renewable energy projects have received support through the programme and most of them are based on solar and wind power.

Anni Granat
The author is working as a trainee at the Ministry for Foreign Affairs Department for Communications

pdfRenewable energy market landscape study covering 15 countries in southern and eastern Africa (pdf)

pdfRenewable Energy Market Landscape Study, Volume II

View the Periscope broadcast on the publication of the market survey

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