Development of Wind Energy in Africa

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Development of Wind Energy in Africa ( development-wind-energy-africa )

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47% of total financing (Figure 3.13; a and b). Figure 3.14 suggests a shift in funding channels used to support wind energy projects in Africa, with ODA13 funding decreasing progressively while non- concessional contributions from bilateral and multilateral development agencies, and commercial sources, are increasing. Figure 3.13: Financing of Projects a: Financing for Completed Projects, % of value b: Profile of Participating DFIs, % of Non-Concessional Funding in Completed Projects Private (Equity and Debt), 14% Governmen t Budget, 17% ECA, 8% Green Funds, 0% ODA, 2% DFI (Non- Concessiona l), 59% PROPACO, 1% JBIC, 11% DANIDA, 18% ICO/FAD, 17% Other DFIs, 0% AFD, 0% AfDB, 2% KfW, 32% EIB, 18% Source: Authors’ analysis We find limited use of specialized Funds, such as the Global Environment Facility (GEF), in financing completed pilot or commercial wind energy projects. This trend is changing as larger pools of funds earmarked for clean technologies become available. For example, six of the pipeline projects located in Egypt, Morocco and South Africa are set to receive a total of about USD 400 million from the Clean Technology Fund (CTF)14. GEF is supporting the ongoing South Africa Wind Energy Programme (SAWEP), and was present in Eritrea’s pilot project at Assab. Half of the pipeline projects had equity financing from private investors, relative to less than a third of completed projects. Data on exact amounts contributed by project financiers was not available for a large enough sample to ascertain larger volumes of private funding toward wind energy projects. However some trends are emerging, for example, the growing presence of international wind energy developers as equity providers in pipeline projects. Among the 32 projects expected to receive private equity financing, 41% will likely be financed by firms with a global footprint. Emerging African firms are expected to finance about 26% of the projects – half through joint ventures with foreign international firms; while equity in 20% of the project is expected to come from auto-producers. 13 Official Development Assistance is defined by OECD as those flows to countries and territories on the Development Assistance Committee List of ODA Recipients and to multilateral development institutions which are: (i) provided by official agencies, including state and local governments, or by their executive agencies; and (ii) each transaction of which: (a) is administered with the promotion of the economic development and welfare of developing countries as its main objective; and (b) is concessional in character and conveys a grant element of at least 25 per cent. 14 The Clean Technology Fund (CTF) is a multi-donor pool established to provide grants, highly concessional loans or risk mitigation instruments to projects that improve the environmental footprint of key emerging market economies. 16

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