Grid infrastructure secures the bulk of May funding

From the newsletter

Of the $17.6 billion raised in May, 80% was allocated to grid infrastructure. Solar came in second at 17%. Hydropower, which sees few projects but attracts big-ticket funding, only had a single project that accounted for 2% of the total. Emerging sectors like wind and battery storage received 0.6%, based on data collected by Renewables Rising and first published two days ago.

• Many African grids have limited power transmission capacity. With renewable projects emerging even in places without grid extension, new projects are integrating grid infrastructure development directly with power plants.

• Solar continues its dominance due to its decreasing costs, scalability, widespread availability of sunlight, and relatively quicker deployment times.

More details

• The largest share of energy infrastructure funding went to Morocco, which received $14 billion, marking the largest deal ever in the country in a public-private partnership. Morocco plans to build a 1,400 km high-voltage direct current line with the capacity to transmit 3,000 MW. However, the funding will also be used to support other projects, such as 1,200 MW of solar power and water infrastructure development.

• Mozambique received $43.6 million to build two 43 km single-circuit, 66-kilovolt transmission lines to transmit clean wind energy from the 120 MW Namaacha Wind Farm. The line extends to connect to the Southern Africa Power Pool market. Other countries that got financing for grid infrastructure include Namibia  ($67 million) and Mauritania ($11 million).

• Solar, which came second, had 17 funding deals spread across Africa. Nigeria's solar market received $1.9 billion, mainly in commitments from the Nigerian Climate Investment Platform (NCIP) and the Nigerian Capital Development Fund (NCDF). 

• Ethiopia secured two solar funding deals worth $610 million from Chinese investors. One deal supports the establishment of a solar cell manufacturing plant to tap into the country's cheap power and export to the US. The other deal will see the development of solar projects.

• Hydropower emerged third, securing one major deal: a $350 million grant. This was to support the construction of the Mpatamanga hydro plant in Malawi. Being a grant, it will help in lowering electricity tariffs and allow Malawi to connect more people affordably and also export cheap power.

• Wind energy received $67.1 million, which accounted for just 0.6% of total funds raised, and all went to Namibia to support the construction of a 44 MW wind farm, the country's largest wind project. The farm targets to reduce dependence on imports and increase domestic renewable energy capacity.

• Battery energy storage closed in the ranking with $30 million, which went towards the construction of part of the 1,000 MW solar power plant and a 200 MWh battery energy storage system in Egypt.

Our take

• The different technologies received a share of funding, clearly showing how all have matured to be economically viable. Emerging technologies like battery energy storage will keep gaining more funding as they mature and cost less.

• Solar power dominance could be a wake-up call for African countries to grow their local manufacturing capacity, given the demand that guarantees them economies of scale.

• Grid infrastructure, which has long been receiving the least funding, is expected to grow with the increasing adoption of renewables that will demand the construction of new power lines.