New Markets in Africa: How to Dig Gold in the Photovoltaic Industry?

Introduction: From a resource perspective, that is, in terms of direct solar irradiance, the development potential of Africa's solar energy industry is undoubtedly the best in the world. Undoubtedly, in recent years, Africa has risen to become the world's largest market for solar power generation potential.

Solar Photovoltaic Network News: From a resource perspective, that is, in terms of direct solar irradiance, the development potential of Africa's solar energy industry is undoubtedly the best in the world. Undoubtedly, in recent years, Africa has risen to become the world's largest market for solar power generation potential. Especially after the financial crisis in August 2013, the speed of new energy installations in developed countries continued to slow down, and more and more investors are turning their attention to the new energy field in emerging developing countries, especially in Africa.

In October 2013, the Obama administration established "Africa Power" and proposed the "Electricity Africa Plan", which aims to provide $7 billion in funding to sub Saharan African countries over a period of five years. The resulting private financing also amounts to $9 billion for resource development, power generation, power transmission, and energy management capacity building. Among them, the plan is to build a total of 30000 megawatts of renewable energy generation, igniting a wave of investment in new energy in Africa, especially in the solar energy industry.

Recently, with the joint efforts of sponsors such as the UK Department for International Development (DFID), the Obama administration's Electricity Africa Plan, and the ADB Multilateral Investment Fund, Bloomberg New Energy Finance BNEF released the Climatescope 2015 Clean Energy Analysis Report. The report points out that 2014 was a record breaking year, with over half of the annual new project investments in the global clean energy power generation sector invested in emerging markets, while less than half were invested in developed countries/regions.

As the enthusiasm and pursuit of new energy in developed countries diminish, more and more solar energy companies are targeting emerging developing country markets. Especially in the Asia Africa Latin America region, where the economy is growing rapidly and there is a lack of electricity supply, traditional energy investment is huge, construction costs are high, and construction cycles are long. In contrast, developing new energy has become a good choice for many developing countries.

In addition, with three major changes in the global market: oil prices have fallen by nearly 50%; A significant appreciation of the US dollar; Long term interest rates continue to decline, even sliding to negative rates in some markets, and the world is in a new normal of ultra-low interest rates, which also provides new opportunities for overseas investment.

Data shows that several major countries/regions, including Brazil, South Africa, and China, attracted a total of $103 billion in clean energy new investment projects in 2014, despite their economic downturn.

The researcher explained that the continuous decline in clean energy costs is a key factor driving industry development. The global cost of solar photovoltaic power generation is decreasing at a rate of 15% annually. Some emerging markets are dragged down by high fossil fuel electricity prices on the one hand, and have sufficient lighting conditions on the other hand, so solar energy is particularly competitive for these markets.

▼New business models under immature power transmission networks

In the three emerging solar energy markets of Asia, Latin America, and Africa, research in the entire energy market is not yet in-depth enough, especially in Africa. The main markets in Africa are concentrated in the first few relatively large regions. Especially in the construction of off grid power systems and the construction of large power stations in a few areas.

The development of large-scale renewable energy in Africa is relatively limited. Because the construction of the entire country's power grid is not yet perfect, strong support is needed for electricity. But many innovative models have emerged tailored to local conditions, especially unexpected breakthroughs in the utilization of distributed small-scale photovoltaics.

1、Household small-scale photovoltaics.

2、Mobile payment type purchases the electricity generated by solar energy.

3、Purchase electricity from the conventional power grid.

Off grid power systems are small-scale solar energy projects tailored to local conditions in Africa, which has also led solar energy experts to discover new technological directions. Especially in the development of small-scale, off grid power networks such as daily lighting and mobile phone charging, there is infinite potential. At present, some African power projects are specifically aimed at local development activities of this type. There are currently companies that have benefited from this model, which is worth learning from for investors.

In Africa, almost 100% of people have access to mobile phones, but only 20% have access to electricity. For example, Phoenix in the United States. The portable solar base station developed by the company can provide mobile phone charging services for areas without grid coverage.

▼Beware of Regional Traps

But entering the African market also requires caution against regional "traps". The clean energy analysis report specifically points out that the regional development of the African market is very obvious. At present, the countries with good development in renewable energy are only limited to South Africa, Kenya, Ethiopia and other countries. The reason is that in 2011, these countries began bidding for renewable energy projects, promoting the development of the new energy industry.

Although the photovoltaic industry in Ethiopia is developing rapidly, most of them are small-scale off grid photovoltaic projects. The overall institutional policies are still relatively lacking. Especially the tax policies are not perfect.

Probably the top ten most attractive countries in Africa: South Africa, Ethiopia, Sierra Leone, Morocco, Sudan, Egypt, Mozambique, Eritrea, Kenya, and Zambia.