The reality is such that not enough investment capital flows into African clean energy projects.
One option to consider for smart cities in Africa is green bond issuance. Green bonds are used to finance projects in renewable energy, energy efficiency, low-carbon transport and wastewater treatment.
In the fourth quarter of 2015, the issuance of green bonds reached $15.2 billion, boosted by activity by financial institutions in the build up to the Paris climate talks.
The dearth of private institutional investor capital, such as U.S. and European pension funds, which manage trillions of dollars, is especially glaring. While utility-scale projects such as Morocco’s 510-megawatt solar project and Kenya’s 300-MW wind project have secured key financing to begin construction — the first 160-MW phase of Morocco’s project will begin operating later this year — nearly all of the capital was from public sector sources such as the World Bank and African Development Bank.
Avoiding redundant investments in smart city infrastructure is another big theme for Africa.
Market barriers range from financial and business risk, regulatory hurdles to city and utility silos as well as limited access to data.
Enacting policies to reduce capital costs and risks is important. Governments can help reduce transaction costs by promoting contract standardization and securitization. Egypt, Kenya, Uganda and South Africa, among them — now have feed-in policies where the government guarantees a price (often at a premium) to compensate producers for certain types of renewable energy.
In terms of global R&D
Major Smart Energy for Smart City Players ABB Accenture AT&T Cisco Systems Hitachi Huawei Itron Oracle S&C Electric Company SAP Schneider Electric Siemens SSN Toshiba
ABB leads all vendors in terms of total microgrid capacity and Schneider Electric leads in terms of the total number of microgrid projects in its development pipeline. The leading resource choices are diesel in terms of capacity and solar PV in terms of being included in microgrid projects.