Examining the role of risk mitigation and transfer for renewable energy investments: case studies in West and Central Africa

Sub-Saharan Africa is the region with the greatest need for additional energy to meet the demands of its growing economies and populations. Under any scenario of development and economic growth in the area, electricity consumption is bound to increase dramatically in the following decades.

This report surveys planned and existing renewable energy projects to support the growing energy demand, with a focus on the financial strategies used to develop them and minimize risk to investors.

By interviewing key project stakeholders, we outline the importance of such tools in addressing various risks, particularly offtaker obligations. We conclude that risk mitigation is needed, but far from sufficient in overcoming the structural macroeconomic barriers that many countries in the region face. We recommend pursuing models that circumvent these barriers in the short term, such as leasing or using viable businesses as anchor loads, along with addressing structural issues in the long term, especially reducing debt in the energy sector.

This is the second in a series of Finance for Sustainable Development reports that will eventually cover all sub-Saharan Africa regions and is accompanied by a conceptual review of risk mitigation and transfer for renewable energy investments.