Leading finance experts at this week’s Africa Climate Summit have called on banks and other financial institutions to take on more risk when considering investments in clean energy projects in Africa to help meet goals to deploy more renewables on the continent and boost green growth. Speaking at an event on the sidelines of the summit in Addis Ababa, Admassu Tadesse, president of the Eastern and Southern African Trade & Development Bank (TDB), said financial institutions should consider backing projects that would not traditionally have been seen as bankable. A different approach is needed because business as usual “is not going to get us to scale”, he added. The World Bank estimates that around 600 million people in sub-Saharan Africa lack access to electricity. To close this gap and increase productivity, African leaders have pledged to deploy 300 gigawatts (GW) of renewable energy capacity by 2030 as part of the 2023 Nairobi Declaration. That represents a large jump from the 56 GW recorded in 2022, requiring growth of 23% per year, according to a new report on African renewables investment released at the summit. It notes that since 2022, annual growth has hovered at just above 6%, with more investment still going into fossil fuels. Sep 8, 2025 News Second Africa Climate Summit seeks to jump hurdles to green industrialisation A report on progress since the first summit in 2023 says financial, infrastructure and trade obstacles are hampering “climate-positive growth” on the continent Read more Sep 8, 2025 News At climate summit, African leaders call for a bigger role in energy transition African government heads appeal for climate investments, as the continent grapples with slow progress towards its vision of becoming a clean energy hub Read more Sep 9, 2025 Energy China on course to peak fossil fuel power as soon as this year, reports say The Asian nation’s energy transition is entering a new phase, with soaring renewables reducing demand for fossil fuels, analysis shows Read more Another recent report from energy think-tank Ember shows that solar energy is experiencing a boom on the continent, with solar panel imports from China jumping 60% in the year to June 2025, measured by capacity. But Africa’s growth is still lagging behind some other parts of the world. Pakistan, for example, imported more solar panels in that period than the whole African continent. Tadesse said financial institutions “fixate too much on debt”, with more than 30 African countries in, or at high risk of debt distress, seen as limiting their ability to repay loans. But to get the ball rolling in the region, financial institutions need to take on more risk, he argued, pointing to blended private-public finance as a potential solution, as well as financial guarantees and other instruments to mitigate risk. “We are taking some very bold decisions now to put that kind of capital up there to support the [project] developers and promoters who are actually taking a lot of risk,” Tadesse said.  Kenya’s Lake Turkana Wind Power Project – which boasts 365 wind turbines with a combined capacity of 310 megawatts – for example, was frozen after early problems caused key investors to pull out. But thanks to the provision of hybrid debt and equity capital from a range of public and private investors, including a €20 million partial risk guarantee from the African Development Bank (AfDB), it managed to get off the ground. Ten years on, it is cited as a successful case study, Tadesse noted. Panelists, including financiers, experts and development practitioners, pose for a picture at the launch of an energy investment report on the sidelines of ACS2 (Photo: Vivian Chime/Climate Home News) Attractive projects for investors Kevin Kariuki, vice president for power, energy, climate and green growth at the AfDB, said that while derisking is important to expand energy access in Africa, countries still need to develop well-structured projects that can draw in investors.  “A reformed sector plus capital equals well-structured projects,” Kariuki told an event to launch the renewables investment report, adding that to attract private finance, countries need to “make good policies – then investors can start looking at Africa as a viable investment destination”.  China on course to peak fossil fuel power as soon as this year, reports say The AfDB’s Alliance for Green Infrastructure in Africa seeks to raise $500 million in blended finance capital for bankable projects on the continent, with the AfDB providing resources for project preparation and development, Kariuki said.  Africa currently receives just 2% of global clean energy investments, according to the International Energy Agency. This is as a result of uncertainties and perceived high risks, including political and regulatory instabilities as well as economic volatility.  Citing successful projects – including the Turkana wind farm, Africa’s largest, and Morocco’s utility-scale solar farm – the new investment report shows how they benefited from blended finance and public-private partnerships. African governments need to prepare the ground for increased capital inflows by reducing financial risk and strengthening domestic policy and institutional frameworks, it adds. Wangari Muchiri, director for Africa at the Global Wind Energy Council, said policies are central to attracting investments and African countries should make sure they are “clear, predictable, and easy to understand to give investors confidence to bring in large capital into the continent”.  At climate summit, African leaders call for a bigger role in energy transition Boosting demand in Africa Muchiri said African countries also need to work to boost demand for renewable energy to crowd in more investment. While Chinese firms want to manufacture in Africa, less than 1% of global demand for clean power equipment comes from Africa, with South Africa accounting for half of that – which acts as a disincentive, she added. “We need to start to build up capacity within Africa” to boost local demand and bring costs down, she told a discussion at the energy investment report launch. Elsewhere, at a side event on Mission 300, an initiative to provide electricity access to 300 million Africans by 2030, William Asiko, vice president for Africa at The Rockefeller Foundation, pointed to how cellphone companies had taken on investment risk by setting up communications towers to commercialise the sector, making it investable. “How can we do that with [power] transmission lines?” he asked. He said that while individual consumers will not meet the needs of the cost of putting electricity grid infrastructure in place as with the telecoms industry, the Africa Green Industrialisation Initiative – a continent-wide programme aimed at growing clean energy investment and green industry hubs – “can be a big demand driver for Mission 300 and help bring down the cost of putting up the infrastructure”. Second Africa Climate Summit seeks to jump hurdles to green industrialisation Africa’s potential has to be packaged properly to demonstrate the competitive price advantage of manufacturing on the continent using clean energy, Asiko said. Philanthropy, he added, can play a part “in terms of thinking about innovative finance, bringing companies together to talk about what the opportunities are [and] hosting road shows so that countries that now have low-carbon electricity production can take advantage of attracting some of these”. The post To meet Africa’s clean energy goals, investors urged to tolerate higher risk appeared first on Climate Home News.

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