The role of risk mitigation in renewable energy investments in Sub-Saharan Africa

This research project explores the effectiveness of financial risk mitigation in attracting private investment in renewable energy in Sub-Saharan Africa. While renewable energy is the most successful climate-related sector in attracting investment, research gaps exist regarding the effectiveness of risk mitigation at the individual project level.

While renewable energy investments in Sub-Saharan Africa have grown, the progress is slow, attracting less than 1% of global renewable energy financing. Meanwhile, the region makes up 14% of the global population. Renewable energy has the potential to provide the cost-effective power needed to fuel the area’s economic growth and prevent climate change impacts that could diminish the function of existing hydropower.

The project aims to analyse the design, implementation, user experience and results of risk mitigation instruments, including guarantees, political risk insurance, currency instruments and others. The ultimate goal is to gather best practice cases and provide actionable recommendations that can be used to accelerate renewable energy deployment in the region. Through analysis of existing evidence at the project level, consultations with key stakeholders, and local consultation, our experts seek to:

• Establish what de-risking (risk transfer) instruments are available and/or have been successfully implemented for renewable energy projects in the region;
• Analyze the role played by such instruments at project level from different perspectives: independent power producers, financial sector, development finance institutions, off-takers, and regulators;
• Identify areas of potential improvement and targeted intervention;
• Provide actionable recommendations to development finance institutions and other stakeholders to maximize their effectiveness.