Africa's solar market is gaining momentum – and more solar potential is waiting to be tapped. In 2022, the continent saw a growth of 949 megawatts (MW), only narrowly missing the gigawatt (GW) mark. It’s cumulative capacity now stands at 10 GW. Many African countries are now introducing market reforms to promote renewable sources of energy, which had been put on hold during the COVID-19 pandemic. The number of invitations to tender for solar generation projects has also been growing dynamically.
Off-grid solutions and PPAs significant
Africa’s solar landscape offers a heterogeneous picture consisting of diverse applications and business models. Off-grid solutions are key in many off-grid regions, while PPAs (power purchase agreements) are becoming increasingly popular in the industrial and commercial sectors as a means of guaranteeing security of supply.
Invitations to tender drive the solar market
Tenders offer foreign investors easier access to the continent’s fledgling solar market and allow private capital to flow into solar deployment in Africa. Invitations to tender ensure a clear regulatory framework and promote free competition. Small-scale, project-based tenders make it easy to implement solar projects in markets that are still at the beginning of the project pipeline for solar power plants.
There have already been successful invitations to tender for large-volume projects in more developed solar markets such as Morocco, Tunisia or South Africa.
Morocco: Back in 2010, the Moroccan government already published an invitation to tender for a solar project with a capacity of 160 MW. The invitations to tender under the 2015 Noor PV 1 program, which was extended twice in subsequent years, were aimed primarily at photovoltaics, or concentrating solar power (CSP) to be precise, in combination with storage systems. The tender under Noor Midelt III for a solar capacity of 400 MW and a storage capacity of 400 MWh was published in August 2023.
South Africa: Since 2011, there have been regular invitations to tender for solar and wind energy project under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The sixth tender in December 2022 led to contracts for a capacity of 860 MW being awarded. In March 2023, the South African authorities issued a tender for floating PV/ground-mounted PV systems for selected dam infrastructure projects.
Tunisia: Tunisia’s first 70 MW tender was published in 2018, followed by an additional 70 MW, and a 500 MW tender in 2019. In 2023, the Tunisian authorities issued a tender for 1 GW for a total of ten projects, which was split into two lots.
Algeria: In 2023, Algeria launched two solar energy tenders with capacities of 2 GW and 1 GW, respectively.
Madagascar: In July 2023, the country issued a tender for two PV power plants with a combined capacity of 210 MW.
Eritrea: In August 2023, the Eritrean Ministry of Energy and Mines published a tender for a 30 MW project.
Recent tenders have also been issued in Kenya, Botswana, Cape Verde, Ivory Coast, Eswatini, Mauritius, Ghana and Namibia.
Challenges for tenders
While significant progress has been made in solar project tenders, Africa continues to face some challenges. Even in established markets such as South Africa, solar projects awarded through tenders have recently run into some problems. The issues were traced back to legal shortcomings and had been exacerbated by delays in the start-up of the systems caused by the COVID-19 pandemic. In cases such as Morocco’s Noor PV II, the tenders even remained undersubscribed.
Market development hampered by structural flaws
In African countries, the free market development through tenders continues to be hampered by structural flaws. In many places, state-owned energy companies – that often lack liquidity – are in charge of planning the production capacities and the development of power stations. Corruption, lack of transparency and ineffectiveness are all major problems. Morocco’s solution, for example, was to establish the Moroccan Agency for Sustainable Energy (MASEN) to act as an intermediary, managing offers and handling the entire process for private investors.
Now that the direct economic burdens of the COVID-19 pandemic have been lifted, many countries are looking to create financial incentives for renewable energies. Egypt and Tunisia are planning to limit subsidies for fossil energy carriers. Another significant challenge for solar projects in Africa is the lack of technical know-how and qualified workers.
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