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Climate-smart investment opportunities in four African countries

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According to a report released recently by the IFC, the investment potential of four African countries in ‘climate-smart’ activities – such as clean energy and sustainable agriculture – will be $783bn by 2030. Of this, 16% is in renewable energy generation; the investment potential in constructing low-carbon buildings is a fifth of the total figure, at $153bn; and half is in transportation.

2015 is also the first year that renewable energy investments in developed nations were eclipsed by those in emerging countries. In the months before COP21 last year, during which all 196 UN-member states signed the historic Paris Agreement on climate change, countries made climate pledges. Called Nationally Determined Contributions (NDCs), these were one of the measures used by the IFC in determining the investment potential of countries.

Take a look at the opportunities in the four countries below.

Côte d’Ivoire

With $9.6bn of investment potential by 2020, Côte d’Ivoire is dwarfed by the African superpowers beside it in the study. Nonetheless, its government is committed to reducing greenhouse gas emissions by 28% by 2030, while at the same time providing electricity to everyone, making renewable energy a sector “well-placed for growth”.

Renewable energy

Currently, the only significant renewable energy used in Cote d’Ivoire is large hydropower, which produces 30% of the country’s electricity. Natural gas accounts for the remaining 70%. The IFC states that there is “good potential”, though challenged by high costs, for solar power in the north. The total renewable energy investment potential is $2.7bn.

Côte d’Ivoire is also a notable agricultural producer, which means that biomass energy projects could make use of feedstocks.

Urban infrastructure

Green buildings ($562m), waste ($400m) and transport ($1bn) each need investment to cater to the country’s growing population, with transport highlighted in the Ivorian government’s NDC, including increasing the portion of biofuels used in gasoline.

Kenya

Last year, Kenya climbed 21 places on the World Bank’s ease of doing business ranking – to 108 out of 189 countries reviewed – which earned it the accolade of third most-improved country in the ranking.

This is good news, considering that the east African country’s investment potential is $81bn from 2016 to 2030. Kenya established a 20-year fixed tariff for the majority of renewable energy types in 2015, as well as standardised power-purchase agreements. This, combined with its renewable energy targets of 50% of capacity by 2033, makes a strong argument for investment into the country.

Renewable energy

In 2015, geothermal energy accounted for 27% of Kenya’s installed power capacity. And the report calls Kenya’s solar PV potential “excellent”, with 30% of Kenyans who don’t have access to the grid already served by solar power.

Urban infrastructure

Most Kenyans still live in rural areas, but because the country’s national development plan lists one of its goals as reaching upper-middle income status by 2030, the IFC sets the investment potential for green buildings at $762m by 2020.

Agriculture

The Kenya National Agricultural Insurance Programme provides compensation to farmers and owners of livestock for climate-related shocks such as drought and flooding, and is a partnership between government and the private sector.

“Other private sector opportunities to enhance resilience include agricultural and livestock waste for energy generation, improved crop productivity, water resources and more use of sustainable fertilisers.”

Nigeria

Nigeria’s only grid-connected renewable energy plants are three hydropower stations. Its economy is heavily reliant on fossil fuels, and the country is rich in oil and gas.

Renewable energy

However, the Nigerian government has expressed the desire to increase the use of renewables, and in a country with frequent power cuts and only 58% of the population having access to the grid, renewable energy could meet this need.

The Nigerian government has a set a target of 40GW of installed energy capacity by 2020, with 10% of this being renewable. The IFC lists off-grid solar PV as accounting for the total $13bn climate-smart investment potential by 2020.

Agriculture

While Nigeria imports most of its food, its NDC is aiming to use energy-generating agro-livestock waste, increase the productivity of crops, improve the efficiency of water and energy use, and use sustainable fertilisers, all to reduce carbon dioxide equivalent emissions by 74 tonnes by 2030.

South Africa

South Africa’s renewable energy investments increased by 329%, to $4.5bn in 2015. From 2016-2030, the IFC estimates that the climate-smart investment potential in certain selected sectors will be more than $588bn. The country’s NDC caps emissions between 2015 and 2030, and its Integrated Resource Plan, the country’s capital build strategy to 2030, has a goal of more than doubling power capacity (43GW to 89.5GW), with renewables making up 20% of this. It is aiming for a 97% electrification rate by 2025.

Renewable energy

South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has approved 79 renewable energy projects by independent power producers. The cost of wind and solar technology has decreased by over 70% over the course of four rounds of bidding, to the point where “it is now competitive with new-build coal and gas”. Ninety percent of the country’s electricity is currently from coal.

Its climate-smart investment potential in the power sector is $14bn by 2020.

Urban infrastructure

The green investment potential in South Africa’s urban infrastructure is set at $524bn by the IFC, with most of this going to transport ($458bn), followed by buildings ($80bn) and waste ($4bn). The large proportion of total investment credited to transport is partly accounted for by the government’s plans in the NDC, “To integrate electric vehicles into the government fleet, increase the number of efficient vehicles on the roads to 20 percent by 2030, and promote urban mobility through a non-motorised transport network.”

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