Falling component costs and attractive investment regimes have made PV projects a cornerstone of new global generation capacity but challenges remain in sub-Saharan Africa and other developing markets.
JETPs are intended to wean such markets off oil and coal. Solar is set to dominate in sub-Saharan Africa, with its need for access to electricity and its bountiful solar irradiation. PV plants can take shape quicker than thermal or big hydro projects. According to the International Energy Agency (IEA), Africa has at least 40% of the world’s solar potential but, in 2022, accounted for only 1% of capacity.
While Africa accounts for just 4% of global carbon emissions, its development trajectory is vital to global climate policy because of rapid population growth and a related increase in per capita emissions as living standards rise. Africa’s population increased from around 818 million in 2000 to 1.48 billion in 2024, and is forecast to reach 2.5 billion by 2050, and 3.92 billion in 2100. Emissions could rise if Africa attracts manufacturing capacity moving out of China because of rising labor costs.
The 2015 Paris Agreement included an ambition to limit the increase in average global temperatures this century to 1.5 C by cutting global emissions by 45% from their 2010 levels by 2030, and by reaching net zero by 2050. Escalating African emissions pose a challenge to those aims.
Leaders on the African continent want renewables finance in return for leaving oil and coal reserves untapped.
Western cash
The International Partners Group (IPG) of the governments of the United Kingdom, United States, European Union, France, Germany, and Canada was set up at the COP26 climate summit in 2021 to provide renewable energy investment to developing countries, with Denmark and the Netherlands joining in October 2023. JETPs are the centerpiece of its strategy – serving as conduits for Western finance.
JETPs finance low-carbon projects in return for commitments by recipient governments on renewables and energy sector emissions. They are also designed to enable the UN Sustainable Development Goals (SDG), to provide universal access to electricity by 2030.
JETPs should “support key reforms and fund infrastructure that crowds-in additional investment across the energy sector,” said Theresa O’Mahony, UK government deputy envoy for JETPs. They provide finance and technical assistance for clean energy generation and grid and energy storage capacity. JETPs have been agreed with Indonesia (with a $20 billion budget), Vietnam ($15.5 billion), South Africa ($11.6 billion), and also Senegal ($2.7 billion).
O’Mahony said solar “plays an important role” in JETPs as the primary focus is “dependent on national plans and strategies.”
JETPs are funded by donor governments – including through multilateral development banks and development finance institutions – philanthropists, and the private sector.
“By bringing together finance from multiple sources, JETPs support countries to deliver policy reforms that allow for private and public investment in renewable energy and the decarbonization of their energy systems,” said O’Mahony.
Frequent blackouts
The first African JETP was signed with South Africa, the continent’s biggest power sector emitter, due to 85% of its 42 GW generation fleet being coal-fired. In 2020, the International Renewable Energy Agency (IRENA) found that 49% of South African power could “realistically and cost-effectively” come from renewable energy by 2030. That was almost one-third higher than the target set by a government concerned by coal industry job losses.
Frequent blackouts have seen the government gradually pivot toward solar and wind power and successful JETP funding could see other African nations follow suit. South Africa added 2.9 GW of, mostly commercial and industrial (C&I) solar in 2023 for a total of 7.1 GW. The rest of Africa added 800 MW for a total of around 9 GW.
South Africa’s JETP details are yet to be finalized but the presidency in November 2023 announced funding and tax incentives for rooftop PV – particularly in the coal heartland of Mpumalanga province, which will also receive finance for a solar research center.
Moribund coal-fired plants with grid connections can host renewables. At the Komati coal-fired plant that closed in 2022, national utility Eskom is planning 150 MW of solar, 70 MW of wind, and 150 MW of battery capacity.
Sufficient funding
The IPG will fund 2 GW of extra Eskom storage, the European Investment Bank is lending €200 million ($217 million, on 29/05/24) to the Development Bank of South Africa for PV and onshore wind, and the South African Electricity Regulation Act Amendment Bill, passed in March 2024, will open up competition to coal-fired power generation.
Senegal will raise the share of renewables in its energy mix from 25.75%, in 2022, to 40% by 2030, and will draft a roadmap for low greenhouse gas development by the COP30 climate summit in 2025. In return, the country will receive €2.5 billion of JETP finance over three to five years through grants, concessional loans, and investment guarantees. Senegal had 245 MW of solar and 282 MW of other renewables in 2022. Solar uptake has been sluggish in Africa because of a lack of operations and maintenance capacity and replacement-part supply chains, and of regulatory support for grid operators to connect renewables.
The IEA’s “Africa Energy Outlook 2022” report estimated that support for African renewables could drive down the levelized cost of energy (LCOE) from solar, from between $31/MWh and $91/MWh, in 2020, to between $18/MWh and $49/MWh by 2030, making it the cheapest option (see chart above).
Scatec's Wildschut told pv magazine his company is “actively exploring opportunities to leverage these [JETP] initiatives to support our existing and future PV projects.”
Accelerated investment
JETPs, however, could fail to deliver accelerated investment in fossil fuel alternatives, according to Terje Osmundsen, CEO of solar developer Empower New Energy. He wants JETP backing to fund a “green certificate, feed-in-tariff, or carbon credits” to pay developers for every kilowatt-hour of green electricity generated, via a capital cost reduction for renewables, energy storage, and grid investment. Osmundsen said each billion dollars of JETP finance could unlock 4 GW of solar for around $15 per ton of carbon avoided to $20 per ton of carbon avoided – around one-third of European carbon trading prices.
Empower New Energy is assessing Senegalese opportunities but Osmundsen said JETPs must address fossil fuel subsidies, currency instability, foreign exchange regulation, and a lack of net-metering. The chief executive added that JETP finance should also address millions of highly polluting diesel generators, of which there are around 40 GW in Nigeria alone.
Fabrizio Bonemazzi, training and capacity building area manager at RES4AFRICA, a foundation that works to ensure access to sustainable energy in Africa, said that the funding gap for African solar can best be closed through creating clear and stable national energy sector regulatory frameworks that favor decarbonization and sustainable electrification. It also requires de-risking investments through warranty mechanisms that cover grid connections, the curtailment of excess electricity, and energy offtaker and foreign exchange risk.
By Neil Ford
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