Financing Renewable Energy Projects for Sustainable Economic Development in Africa

Elsevier, Energy Procedia, Volume 93, August 2016, Pages 113-119
Chijioke Oji, Ogundiran Soumonn, Kalu Ojah

Access to clean and stable energy is a major challenge for many developing African countries. This research aims to investigate ways in which financing renewable energy projects (REPs) can help to address this problem. We find that a mix of traditional and innovative methods is used by financiers, as they see fit, in specific financing situations. In addition, we find that for investment firms, the perception of financial risks associated with financing REPs in semi-urban and rural areas is higher than that for REPs in urban areas. Furthermore, we find that for larger firms financing REPs, safety of the environment or impact on local economic development are not prioritized goals. However, for smaller localised firms, contributing to a sustainable economic development is an important consideration when financing REPs and improving the capacity of renewable energy technologies (RETs). We propose the promotion of the two-hand renewable energy service company (ESCO) model as an efficient financial vehicle for increasing sustainable economic development through the production of reliable and stable electricity in semi-urban and rural communities.