Floating solar makes a promising start in energy funding

From the newsletter

Floating solar panels secured their first financing since the start of 2025, marking their entry into our funding database, while hydropower received a boost through rehabilitation funding. Together, the two accounted for just 3% of the total $3.1 billion in August funding. Grid infrastructure continued to dominate, attracting more than half of the total.

• About 1.5 GW of floating solar projects are currently under development across Africa, but the continent has the potential to generate over 100 GW from its freshwater reservoirs alone.

• Refurbishing old hydropower plants could also generate at least 1.6 GW of baseload power, enough to supply electricity to more than 1.5 million households. The latest finding data suggests there is hope.

More details

• Solar, in general, along with grid infrastructure, has been receiving more funding compared to other technologies. Cost reductions and modularity have played a key role in this trend. For grid infrastructure, it remains Africa’s main bottleneck, and there is little choice but to invest—especially now as more greenfield renewable energy projects move toward completion.

• Floating solar on hydropower reservoirs, however, has remained a lesser investment target at the grid scale level. While it has worked well on a small scale for agricultural firms with water reservoirs for irrigation, only a few governments, like Ghana and Morocco, have adopted it for grid-scale operations. This month's funding shows some progress, with Afreximbank providing $4.4 million for feasibility studies on a 1 GW project in Zimbabwe, and Qair securing $5.7 million to develop a 5.8 MW floating solar project in Seychelles.

• The manufacturing space for renewable energy technologies is largely dominated by solar. At least 10 GW of manufacturing capacity is currently under development. This month attracted two new projects, one in Egypt and another in Algeria.

• The Egyptian project secured $220 million from several funders, including Chinese investors. It will produce 2 GW of solar cells primarily for export, 2 GW of solar panels for both local and export markets, and a 1 GWh energy storage system factory. The Algerian project will focus on producing solar glass, with an annual capacity of 1.53 million tonnes, although funding details were not announced.

• There was only a single solar project that announced funding, a 50 MW solar project in Benin being built by Axian Energy at $52.7 million. However, the sector in general received funding to support decentralised solar energy solutions. The Nigerian government provided $66.7 million to deliver distributed solar power to public institutions, replacing diesel generators and reducing carbon emissions. Zambia also partnered with Anzana Electric in a $300 million deal to provide electricity to 2 million households, targeting rural communities.

• The grid infrastructure received the highest share of funding, at about $1.5 billion. This was mainly directed towards Nigeria's power sector, which is ranked among the worst in Africa due to frequent blackouts. The Nigerian government secured a commitment from the Japanese government of $428 million for grid upgrades. In addition, Access Holdings pledged up to $100 million to support Zambia’s power generation and transmission projects aimed at closing energy gaps and boosting industries like mining.

Our take

• Even as renewables grow, grid infrastructure will keep absorbing the lion’s share of funding. Without transmission and distribution upgrades, new projects cannot be integrated, making grid investment the “gatekeeper” for all other energy solutions.

• With many African dams ageing, refurbishment offers a cost-effective way to unlock reliable baseload capacity. Expect multilaterals and DFIs to step up support, as modernisation aligns with both climate resilience and energy security agendas.

• The Egyptian and Algerian projects suggest a strategic move toward localising parts of the value chain, solar cells, panels, glass, and storage. If successful, Africa could transition from a pure importer to a regional hub, reducing costs and creating jobs.