UK campaign to focus on solar power investment in sub-Saharan Africa

The Department for International Development said the 'Energy Africa' campaign will also tackle "inefficient markets, policy barriers and under-investment" and support the development of additional systems for electricity payments to be made using mobile phones.

Richard Branson, founder of the Virgin Group said that Virgin will support the campaign because "solar is a tremendous opportunity for African countries to leapfrog traditional carbon intense energy systems to a cost effective, clean energy future".

Branson said: "Brought to scale, solar will give countries a stable, reliable energy source and boost job growth. Virgin is planning to invest in a number of projects to help turn this into a reality."

Former UN secretary-general Kofi Annan, who chairs the Africa Progress Panel (APP) and took part in the Energy Africa launch, held at Facebook’s offices in London on 22 October, said: "An enabling environment must now be created to allow this growing pool of energy investors to deliver clean energy ‘off grid’ in a way that is simple for both investors and consumers to understand."

According to the APP, on current trends it will take Africa until 2080 to achieve universal access to electricity.

UK international development minister Grant Shapps said the “best of British expertise and ingenuity will be applied” to the Energy Africa campaign. "It is shocking that around two out of three of the African population have no electricity in their homes. This not only holds back individuals, but entire nations. It prevents businesses from trading and holds back economic growth – indeed outages cost African countries 1-2% of their annual gross domestic product."

Shapps said the campaign will "bring investors together with solar energy companies – highlighting the massive opportunity and helping finance to flow and businesses to grow".

'Partnership agreements' to be signed with African governments will help to "to tear down legislative, policy and bureaucratic barriers" Shapps said. The partnerships will address issues such as "the financing space which prevents innovative companies funding the 12 to 36 month gap between making the equipment and it being paid for by the home owner".

Shapps said initial partnership agreements signed with the governments of Nigeria and Sierra Leone would be followed by "a dozen more".

According to the World Bank’s International Finance Corporation (IFC), "solar power has enormous potential as an energy source in SSA, where two thirds of the population lacks access to electricity and grid-based power generation capacity is far short of what is needed".

The IFC said the cost of solar photovoltaic (PV) technology "has fallen dramatically... solar PV can now deliver power at less than 15 US cents per kilowatt hour (US¢/kWh) with long-term price certainty, compared to more than 25 US¢/kWh for diesel fired power that is also subject to volatility with global oil markets".

In 2012, the IFC agreed to invest around $143 million in direct financing and coordination of around $264m in parallel loans to support the construction of concentrated solar power projects in South Africa.

A report published last year by professional services firm PwC said long-term investors including pension funds and wealth managers are becoming increasingly involved in the equity and debt of wind and solar projects.

PwC’s 6th annual ‘Low Carbon Economy Index Report’ (20-page / 1.06 MB PDF) said falling costs, especially in solar, have triggered a withdrawal of subsidies from governments, but "institutional investors have filled the space".