Sub-Saharan Africa’s off-grid solar market to grow 450% by 2035

Sub-Saharan Africa’s off-grid solar capacity is set to increase by 450% by 2035, according to forecasts from Wood Mackenzie.

The consultancy’s latest report, Off-grid solar PV in Sub-Saharan Africa: a multi-gigawatt growth opportunity, refers to off-grid solar as “Sub-Saharan Africa’s primary electrification engine” due to a combination of factors including falling module prices, increasing diesel expenses and developments in private capital.

Sohan Gwalani, Wood Mackenzie Research Analyst, Middle East and Africa Renewables, told pv magazine the outlook models ten markets in depth with the picture varying significantly from country to country.

“[That’s] really the main finding of the report,” Gwalani added. “In markets like Nigeria and the Democratic Republic of the Congo (DRC), the bulk of the capacity growth is driven by larger commercial, industrial and mining loads, because that is where diesel costs are highest and the economic case for solar is strongest.”

Nigeria accounts for close to 35% of off-grid solar installations in Wood Mackenzie’s forecast. Gwalani said much of this growth is associated with existing commercial and industrial users reducing their reliance on diesel generation rather than purely providing first-time electricity access.

“In the DRC, it is a mix of mining loads displacing diesel and genuine first-time rural electrification, given the very low access rates,” he added. “In Kenya, the market is maturing from first-time access toward cost optimisation for users who already have supply. Here, deployment is more distributed across smaller commercial and household systems.”

Gwalani cited other key off-grid African markets as Zambia, which sees mining-linked demand similar to the DRC, Ethiopia, due to its large population and industrial ambitions, and Ghana and Tanzania, which both have significant commercial and rural demand. He added that in Ethiopia and Tanzania, smaller systems account for a much larger proportion of deployments by number, reflecting a greater emphasis on household and rural electricity access.

Gwalani also told pv magazine that financing stands as the biggest barrier to hitting the 2035 forecast.

He explained that African markets are held back by the cost and availability of capital, with currency depreciation and borrowing costs that can exceed 30% making it extremely expensive to finance upfront-heavy solar and storage assets in price-sensitive markets where customers have limited disposable income.

“Overcoming it depends less on subsidies than on financing structures that reduce the cost of capital: blended finance and development-finance guarantees that de-risk private lending,” he said. “Inconsistent rural-electrification policy is a secondary drag, while more predictable, long-term policy frameworks would help crowd in private investment.”

Gwalani added that the models that work best for African markets are those that address currency risk, offtaker credit risk and policy uncertainty.

“Development finance institutions and guarantees that absorb first-loss or currency risk are effective because they let commercial lenders participate at acceptable returns,” he explained. “And local-currency financing is critical, because dollar-denominated debt against naira or shilling revenues is where a lot of projects come unstuck.”

Away from private capital, Gwalani pointed to solar-as-a-service or leasing models that are helping to expand the C&I segment. He added that pay-as-you-go services have been transformative, acting as “the backbone of the household and small-commercial market, especially in East Africa.”

Gwalani also said value stacking is increasingly important. “Layering additional revenue such as appliance finance, insurance, connectivity and even carbon credits on top of the energy sale, which improves project economics and makes more deployments bankable,” he told pv magazine.

Research published by the International Energy Agency (IEA) last October found Sub-Saharan Africa accounts for eight of every ten people lacking access to electricity worldwide.

The post appeared first on pv magazine Global.