December 7, 2023
World Bank

The World Bank Group announced yesterday  an innovative $2.7 billion initiative to accelerate the pace of renewable electrification in Nigeria and other countries within the Sub-Saharan Africa by 2030.

The World Bank, the Multilateral Investment Guarantee Agency (MIGA), the International Finance Corporation (IFC), and other development agencies will promote private investment in distributed renewable energy (DRE) systems to electrify targeted areas quickly and efficiently.

The World Bank has an active portfolio of $2.7 billion for DRE access, targeting electrification of about 40 million people. Electricity is the foundational enabler to address other critical initiatives such as food insecurity, gender equality, climate resilience, and health.  

The International Finance Corporation (IFC) also has initiated the Scaling Mini Grids Program and is building on its Lighting Africa Engagement. The Multilateral Investment Guarantee Agency (MIGA) also has $83 million in DRE guarantees and a $400 million pipeline.

IFC Vice President of Cross-Cutting Solutions, Emmanuel Nyirinkindi, said investing in distributed renewable energy is one of the most efficient ways to tackle energy access challenges and to support economic activities in Africa while addressing greenhouse gas emissions.

“Mini-grid systems are one example of DRE and can efficiently deliver energy to cities and rural areas outside the limits of a national grid,” he said.

Also, MIGA is developing “fit-for-purpose” instruments that address the unique risks faced by distributed energy investors and is actively engaging with partners to bring together complementary solutions for its DRE clients.

DARES responds to United Nations Sustainable Development Goal 7, which calls for “affordable, reliable, sustainable, and modern energy for all” by 2030. These core targets are at the platform’s foundation to ensure universal access to Sub-Saharan-Africa.

The Distributed Access through Renewable Energy Scale-Up Platform (DARES) calls for joint action by government, private investors, and development agencies to solve Africa’s immediate needs while developing DRE solutions that can be applied globally.

At current rates of electrification, over a half billion people in Sub-Saharan Africa (SSA) will still be without electricity in 2030 unless the current electrification pace is tripled. Present projections indicate that only eight SSA countries will achieve universal electricity access by 2030, and some will take over 100 years to fully electrify.

The lack of energy access greatly inhibits green, resilient, and inclusive development of many countries in SSA. The expansion of access through DRE systems will answer an urgent need quickly and support climate resilience, food security, and human capital development goals.

DRE systems generally involve a solar photo-voltaic station paired with battery storage. In rural communities, these systems can serve a health care facility, for example, or a group of customers such as households or businesses in a village, operating independently from the national power grid.  DRE systems can be easily installed, are reliable, and do not require the large investment needed to build a utility-scale power plant.

World Bank Vice President for Infrastructure, Riccardo Puliti, said:

“Now more than ever we need innovative solutions that close the energy access gap,” said Bringing together government and the private sector to support distributed renewable energy can help extend electrification to the most vulnerable while also advancing clean energy.”

DRE is the fastest and most cost-effective mechanism to accelerate clean electricity access on the continent. Over the last 10 years, 20 percent of all new electric connections in SSA have been through DRE systems. While DRE is now attracting private sector financing, this support is not at the scale that is needed.

DARES will leverage this positive momentum to work with governments and the private sector to expand DRE investment. The World Bank Group is well-positioned to take the lead in scaling the DRE sector in SSA, using a different approach from traditional infrastructure investments to incentivize private financing commitment.

 MIGA Executive Vice President, Hiroshi Matano, said:“MIGA is in a strong position to support private investment through new and innovative risk mitigation solutions that are fit-for-purpose for the unique risk faced by investors”.

“We look forward to working with Sub-Saharan African countries to create opportunities to combine public and private investment approaches to electrify Africa in the near future.”

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