Oil Change International.
Renewable energy produced through off-grid and mini-grid wind and solar installations – called ‘distributed renewable energy’ – has consistently been identified as the most effective, affordable, and resilient way to deliver electricity services to rural areas without access. However, only about 1-2% of finance for electricity in Africa is currently flowing to distributed renewable energy. Of this, the vast majority has been for multinational companies that are based in Europe or North America or led by entrepreneurs from these regions, meaning profits are largely not remaining in Africa.
Communities in Africa have generally contributed the least to climate change and been undermined the most by international trade and finance policies. They have a right to better international support for distributed renewable energy. In order to reach universal energy access before the 2030 target set by the UN Sustainable Development Goals, international public finance institutions have an urgent responsibility to provide more funding and better financial transparency and tracking for distributed renewable energy. Additionally, they have a responsibility to foster local participation in and ownership of distributed renewable energy initiatives. This briefing provides recommendations for how international public finance institutions can fulfill this responsibility, while revealing that from 2016 to 2018, fossil fuels received more than 3.5 times the support than all kinds of renewable energy did during this period.
This briefing outlines three new areas of recommendations for how these institutions can support the growth of locally owned distributed renewable energy initiatives:
- Support the entry of local finance institutions into the distributed renewable energy sector,
- Facilitate the coordination, research, and planning between international public finance institutions, local banks, and distributed renewable energy providers, and
- Increase support for distributed renewable energy with an emphasis on community-owned and cooperative models.
As governments and public finance institutions around the world prepare historic stimulus packages in response to COVID-19, support for distributed renewable energy for those lacking access to electricity is critical for improving health outcomes during the pandemic as well as building a just recovery with a more equitable and sustainable economy. As climate impacts escalate, it is all the more important to build energy systems that are resilient to future crises, including the global market shocks and natural disasters we can expect to see intensify over the coming century.