Despite the considerable potential that exists to produce electricity using renewable energy in southern Africa, these projects have – thus far – been largely limited to off-grid, small-scale applications, says Frost & Sullivan in a new report.
However, the renewable energy market in southern Africa is expected to grow exponentially in the next few years – chiefly due to the March announcement of the renewable energy feed-in tariff.
According to the report, this market earned revenues of $28.4 million in 2008, and is estimated to increase nearly tenfold by 2015, to reach $262.3 million. The market will include projects to develop energy from solar photovoltaic, solar thermal, wind power and biomass sources.
‘The growth of the wind power market and large-scale solar concentrating projects will be driven by an increasing number of joint ventures,’ notes Sipha Nnawonde, research analyst at Frost & Sullivan. ‘Such ventures will be between project developers with local knowledge and private equity investment firms, backed by the support of international original equipment manufacturers.’
With tightening sources of global credit and more countries reporting negative economic growth rates, private equity investment companies have become more selective and strategic about the sectors into which they invest. Sustainable energy project portfolios have, however, bulged to more than $1 billion dedicated to financing RE projects in southern Africa.
‘This is an indication that investors view RE and energy efficiency projects in southern Africa as having favorable returns and representing a solid investment decision,’ Ndawonde says. ‘An abundance of natural resources, combined with a stable political environment, reasonable economic growth rates and growing interest from private equity firms, means that large-scale RE projects are set to penetrate into the southern African countries of South Africa, Botswana and Namibia.’
SOURCE: Frost & Sullivan
