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New Energy World™
New Energy World™ embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low-carbon technologies.
New financial models advance clean energy in Africa
2/9/2025
8 min read
Feature
New financial models are being implemented in Africa to boost renewable energy investments. These are of critical importance for a continent with abundant solar, wind, hydro and geothermal resources, but where around 600 million people (out of 1.5 billion in total) still lack reliable access to electricity. Samuel Okocha, Roland Mbonteh, Paul Cochrane and Andreia Nogueira describe recent initiatives, from pay-as-you-go schemes to large-scale leasing and government funding.
Financing remains one of the biggest roadblocks to Africa’s transition towards reliable and sustainable energy, plus associated climate goals, with an estimated $200bn needed annually until 2030 to meet these policy objectives, according to the International Energy Agency (IEA). In 2025, Africa received only 2% of the world’s clean energy investment, despite having 20% of its population.
Financial challenges include political instability, regulatory uncertainty, foreign exchange risks, lack of the necessary liquidity among local banks, underdeveloped transmission networks and power purchase agreement (PPA) risks, points out South Africa-based law firm CLG Global.
IEA Energy Investment Analyst Andrew Ward told New Energy World that financial models should be implemented based on renewable technologies and circumstances. For instance, the fact that most people without electricity in Africa ‘have very constrained budgets’ has led to the creation of models such as ‘pay-as-you-go’, that allows consumers to pay smaller manageable instalments (daily, weekly or monthly) instead of a large upfront capital cost to purchase solar home systems.