Page 503 - 2016 - Vol. 40

V. Suggested Solutions for Mobilizing Private Investments for
African Renewable Energy Sector
Private sector is not only a source of finance to African

renewable energy investments but also a main source for the
technology, expertise, and skills that are necessary for mostAfrican
governments to run renewable energy projects successfully(37).
However, as demonstrated in section 3, private actors face many
challenges in renewable energy sector in Africa. Thus, some
reforms in regulatory frameworks and incentive structures are
essential to alleviate these barriers and attract more private actors
to renewable energy generation at an appropriate level. These
reforms can be summarized in the following three steps(38):

1. Improving the risk-return profile of renewable energy
relative to traditional sources of energy. African
governments can achieve this by phasing out fossil fuel
subsidies and introducing feed-in tariffs for renewable
energy suppliers. This step is also essential for increasing
reliability and trustworthiness in government reforms
to energy sector from the perspective of private actors.

2. Using international climate finance efficiently and
effectively. For example, there are resources made
available by developed countries to developing countries
in the form of bilateral or multilateral official development
assistance to support using clean (renewable) sources of
energy. Also, there are resources that can be mobilized
through international carbon markets, particularly
through the Clean Development Mechanism and other
crediting mechanisms under international law.

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