Claudine, the village leader of Juru in rural Rwanda, is among the growing number of individuals who have benefited from the solar off-grid sector. More than half of Juru's 118 families have installed solar home systems, which have significantly impacted the community's access to electricity.
Claudine and her husband grow cassava, beans, maize, coffee beans, and bananas on their small farm. Before installing a solar home system, Claudine struggled to buy petrol and batteries for torches, had difficulty charging her phone, and often had to travel long distances to find a place to charge it. Now, with home electricity, she can charge her phone quickly and easily. The family is saving money that used to go toward energy expenses, and a significant portion of these savings are being put aside.
Claudine's experience is not unique. Over the past decade, millions of families across Africa have been connected to solar home systems, thanks to the ongoing rise of renewable energy financing. As the world moves closer to the year 2030, and with it the desired Sustainable Development Goals, renewable energy and its funding are gaining global traction, becoming increasingly important as climate action becomes a crucial issue worldwide.
In Juru, the impact of solar home systems on education has been profound. All of the village's students passed their national exams with far better results than in previous years. Access to electricity has allowed students to study longer and later into the night, which has led to a marked improvement in academic performance.
The success of the off-grid solar sector in Juru and other communities like it demonstrates the potential of renewable energy to improve the lives of millions of people living in energy poverty. Through continued investment and support for renewable energy financing, we can ensure that more families like Claudine's can enjoy the benefits of access to clean, affordable, and reliable electricity.
Renewables as a catalyzation for change
According to the International Renewable Energy Agency's (IRENA) new report, "Global Landscape of Renewable Energy Finance 2023," global investments in energy transition technologies, including renewable energy, reached an all-time record high of $1.3 trillion in 2022. The growth occurred despite macroeconomic, geopolitical, and supply chain challenges.
The increasing investments in renewable energy technologies reflect the growing recognition of the climate crisis and energy security risks associated with over-reliance on fossil fuels, as Governments and private entities alike are responding to these risks and needs.
However, despite the meaningful growth in the sector, the current pace of investment is still insufficient to put the world on track to meet climate or socio-economic development goals. While global investment in renewable energy reached a record high of $0.5 trillion in 2022, it still represented less than 40% of the average investment needed each year between 2021 and 2030 according to IRENA’s 1.5°C Scenario.
From a social impact perspective, investments are also not flowing at the pace or scale needed to achieve the improvements in livelihoods and welfare called for under the 2030 Sustainable Development Goals (SDGs).
Social or environmental impact? Why not both?
Off-grid solar solutions represent one of the most exciting sectors in impact investing today, combining immense social impact with environmental benefits. By providing underserved communities with electricity for the first time and reducing reliance on combustible fuels, battery-operated torches, and open fires, off-grid renewable energy solutions have the potential to transform lives and communities.
Unfortunately, the majority of the world's population, primarily those in developing and emerging countries, received only a small fraction of global investments in 2020. Sub-Saharan Africa, for instance, received less than 1.5% of the total amount invested globally between 2000 and 2020, exacerbating the disparity in renewable energy financing between developed and developing nations.
In 2015, investment per capita in renewable energy in Europe and North America (excluding Mexico) was roughly 22 times higher than in Sub-Saharan Africa. Today, European investment per capita is 127 times higher, and North America's is 179 times greater. This disparity is particularly concerning given that over 770 million people worldwide live without electricity, with more than 660 million residing in Africa alone. The COVID-19 pandemic has only made matters worse, with the number of people without access to electricity in Sub-Saharan Africa increasing for the first time since 2013.
With population growth rates in many Sub-Saharan African countries outpacing electrification rates, the 2030 Sustainable Development Goal of achieving universal electrification is at risk of slipping away. Off-grid solar solutions are the most cost-effective, scalable option for electrifying rural, last-mile communities in recent years, and they represent Africa's best hope for achieving broad electrification.
As Africa's population is set to grow exponentially and reach 25% of the global population, it is more critical than ever to bridge development gaps and provide communities with better opportunities. Electricity is a fundamental element of life and the foundation upon which education, gender equality, health, and much more are built. Increasing investment in renewable energy and directing it to Africa will help close development gaps, providing communities with better opportunities for social and economic growth.
It is essential to ensure that the world's interconnected societies are thriving, and that includes addressing the needs of the 25% of the global population in Africa. Investing in off-grid solar solutions is not just a worthwhile investment, but a critical step towards a balanced and inclusive world where everyone has access to the fundamental needs of life.
The writer is an impact investor, entrepreneur and the CEO of Ignite Power, leading sustainability-driven innovation across Africa.