Unstable policies, currency risks, others affecting renewable energy in Africa

The International Renewable Energy Agency (IRENA) Monday said the deployment of renewable energy is facing currency, political and unstable political risks.

Director General of IRENA, Francesco La Camera said there is an urgent need for long-term contracts and stable policies to reduce risks related to currency fluctuations and political instability, which remain major barriers to private sector investments in Africa.

Speaking at a press conference at the ongoing Accelerated Partnership for Renewable in Africa (APRA) conference in Nairobi, Kenya, La Camera said IRENA is helping countries like Nigeria to attract project that will expand Nigeria’s renewable energy infrastructure.

He noted the need for attracting both public and private investments to build large-scale renewable projects and interconnected grids. La Camera urged governments across Africa to create enabling environments that include predictable policies, which are essential to de-risk investments.

According to him, Africa faces significant infrastructure gaps, particularly in building flexible, interconnected grids that can accommodate renewable energy sources.

The Director General noted that while hydropower remains a key energy source, increased droughts caused by climate change highlight the need to diversify into solar, geothermal, and biofuel technologies.

La Camera also noted that African countries must tailor policies according to their development stages and resource capacities, noting that transitioning from centralized fossil fuel-based systems to decentralized renewable grids requires overhauling regulatory frameworks.
The agency also encouraged financial institutions to co-develop infrastructure solutions with African nations rather than relying solely on loans and grants.

La Camera noted that access to financing remains a significant challenge for African countries, adding that there is a need for greater collaboration between public and private sectors to mobilize funds.
Countries like Kenya have demonstrated progress by creating favourable investment climates. The concept of a “Marshall Plan” for Africa was proposed to channel large-scale funding toward energy infrastructure.

IRENA urged African countries to leapfrog fossil fuel dependency, emphasizing that clean energy technologies are more economically viable and sustainable.

APRA initiative is focusing on capacity-building, technical support for energy planning, and financial assistance to strengthen local expertise in an regional cooperation, including utility alliances to enhance knowledge sharing and improve the resilience of energy systems.