Here’s how renewable energy could help African economies recover post-COVID-19

Africa, like many regions around the globe, was hit hard by the COVID-19 pandemic, pushing an estimated 5 to 20 million people back below the poverty line. In a recent interview on CNBC Africa, Dan Kling, the CEO of East Africa Power, shed light on how renewable energy could be a key player in helping African governments rebuild their economies post-COVID-19. While the short-term impact of the pandemic has slowed down economies and affected the demand for power, there is a notable surge in the adoption of renewable energy solutions in the off-grid and decentralized space, especially in East Africa. This shift is crucial in providing reliable and affordable power to essential facilities like health centers, which currently lack access to electricity. Looking ahead, Kling highlighted the necessity for increased investment in renewable energy solutions despite a recent dip in investor interest. He emphasized the importance of aligning investments in generation, transmission, and distribution to meet the energy demands of the region efficiently. As the continent grapples with the aftermath of the pandemic, renewable energy presents a significant opportunity for sustainable economic growth. With a projected doubling of Africa's population over the next 30 years, renewables offer a viable pathway to bridge the gap in access to electricity for millions of people. However, challenges remain in making renewable energy affordable for households across the continent. Kling countered the affordability argument by highlighting that the cost of renewables, particularly in the solar and storage space, has been on a downward trajectory, making it a competitive alternative to traditional fuel sources like diesel. To drive down costs further and make power more accessible, Kling stressed the need for public-private partnerships (PPPs) and increased private sector involvement. He noted that the changing equity investment return expectations in the renewable energy sector signal growing confidence and reduced risk, making it an attractive sector for capital investment. Despite advancements in renewable energy, bottlenecks in the early stages of project development and the high cost of capital pose challenges to making PPPs more bankable. Development finance institutions (DFIs) play a crucial role in addressing these issues and catalyzing the growth of renewable energy projects in Africa. Looking towards the future, Kling underlined the pivotal role of renewable energy in addressing critical global challenges such as climate change, future pandemics, and unforeseen disruptive events. He emphasized that renewables will be the sustainable solution for achieving universal access to power and driving socio-economic development in the long run. With a positive momentum surrounding renewable energy, African governments are urged to prioritize investments in the sector to build resilient economies and sustainable futures for their citizens.