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German government investing $115M in renewable energy in Africa
German government investing $115M in renewable energy in Africa
The Global Innovation Lab for Climate Finance (the Lab) launched six innovative finance solutions to drive private capital towards climate action in developing economies. (Courtesy: Unsplash)

The German government has announced that it will direct €100 million ($115.7 million) in investment to accelerate the deployment of renewable energy across Africa.

The capital will be invested through the African Development Bank’s Sustainable Energy Fund for Africa (SEFA) to unlock private sector participation in funding the region’s transition to low-carbon energy resources.

The funding, announced during the United Nations High-Level Dialogue on Energy, will help “unlock private sector investment in green-baseload projects,” according to a statement.

SEFA will use the investment to upgrade power generation, transmission, and distribution networks to ensure increased penetration of renewable energy in African grid networks.

The contribution follows Germany directing €50 million ($57.8 million) in 2020 to support the work being conducted by SEFA.

Norbert Barthle, Parliamentary State Secretary of the German Ministry for Economic Cooperation and Development, said accelerating the energy transition: “…requires the rapid phasing out of all fossil fuels and a massive expansion of renewable energy. The time to act is now.”

The development also follows China announcing that it will cease funding for coal-fired energy generation projects abroad. African countries including Zimbabwe, Zambia, and Malawi heavily relied on funding from China to expand their generation capacity using coal.

However, with the recent announcements by several countries to cease funding coal, mechanisms such as SEFA are needed to support the increased rollout of renewables in Africa. {Coal financing in Africa and Asia shows troubling trend – report}

Factors including lack of funding and government appetite to deploy clean energy resources have resulted in Africa lagging behind other regions in the decarbonization of the energy sector. For instance, the region has only managed to use 0.01% of its wind energy potential with massive capacity remaining untapped, according to the Global Wind Energy Council.

This has resulted in the formation of Africa WindPower, an initiative that will foster dialogue between energy stakeholders and governments on how to accelerate deployment.

The German government is aligning the aid with the G20 Compact with Africa launched to promote macroeconomic, business, and financing reform to attract more private investment in Africa.

Dr. Daniel Schroth, the Bank’s Acting Director for Renewable Energy and Energy Efficiency, added, “Germany’s new contribution is a major boost towards SEFA’s capitalization target of $500 million. It is also recognition of the catalytic role SEFA has been playing in accelerating Africa’s energy transition and supporting clean energy access solutions.”

Other donors supporting SEFA include the governments of Denmark, Germany, Italy, Norway, Nordic Development Fund, Sweden, Spain, the United Kingdom, and the United States, to ensure universal access to affordable, reliable, sustainable, and modern energy services for all in Africa.

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