Next week, the Second U.S.-Africa Business Forum will be taking place on the occasion of the 71st Session of the UN General Assembly. The Forum will focus in particular on several sectors that are important to African economies and offer trade and investment opportunities on the continent, including infrastructure and energy. This piece explores the theme of  energy as an increasingly attractive opportunity for investment in the continent.

Solar energy is a very good and important investment in sub-Saharan Africa.

The energy is cheap, clean and relatively easy to install. It is also very beneficial to consumers. As Andy Herscowitz, the coordinator for Power Africa notes, individuals do not have to rely on an electricity grid that can be unreliable, and once they own their own systems, they are self-reliant for power.

For example, Mobisol, a German solar housing company active in Tanzania and a partner of the Power Africa initiative, provides solar panels that enable customers to power welding and pipe cutting equipment, water pumps, and egg incubators as well as fans to make cook stoves more effective. Solar-powered appliances can be “super efficient,” and utilize a fraction of the power of traditional appliances.

Moreover, an increasing amount of public money is being invested in solar energy, which mitigates risk for private investors, makes long-term capital available at competitive prices, and provides access to government expertise and other benefits that come from working with international financial institutions.

In June, for example, the World Bank through its initiative, Scaling Solar, conducted an auction in Zambia to enable the government to procure solar energy quickly and at very competitive prices. The winning bidders, Neoen/First Solar and Enel, will enjoy some of the lowest prices for solar anywhere in the world at 6.02 cents per kilowatt hour and 7.84 cents per kilowatt hour, respectively. This compares very favorably with oil-based power, which can be three to four times as expensive per kilowatt hour.

First Solar, the biggest U.S. panel producer, and France’s Neoen will jointly build a 45-megawatt power plant and Enel, an Italian sustainable energy producer, will provide power from a 28-megawatt facility. The two companies are expected to be generating electricity within a year. Enel will invest approximately $40 million in the construction of the new plant, and has signed a 25-year-long power purchase agreement for the sale of all the energy generated by the plant to the state-owned utility ZESCO.

Senegal and Madagascar are also participating in the Scaling Solar program, which may eventually spur development of 850 megawatts of solar capacity in the three countries. This could amount to investments of nearly $1 billion.

Scaling Solar was developed to help introduce solar technology to the Zambia, using competitive auctions and the endorsement of the World Bank. That helps to overcome the concerns of international banks about political risk and makes these emerging markets more appealing to developers and investors. It also includes standardized contracts, eliminating the often lengthy process of negotiating power-purchase deals one at a time. Scaling Solar is an initiative of the World Bank Group, Power Africa, the Ministry of Foreign Affairs of the Netherlands, the Ministry of Foreign Affairs of Denmark, and the Infrastructure Development Collaboration Partnership Fund (DevCo).

As part of its “High 5” initiative, the African Development Bank earlier this year also launched a multi-billion dollar New Deal on Energy for Africa, which aims to establish 75 million new off-grid connections. Since USAID’s Power Africa was launched in 2013, the program’s off-grid partners have added more than 2.5 million new electrical connections.

Thanks in part to these initiatives, solar energy in Africa is an increasingly attractive investment.

This article originally appeared on The Brookings Institution’s “Africa in Focus” blog.

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Photo of Witney Schneidman Witney Schneidman

Witney Schneidman has nearly 40 years of experience working across Sub-Saharan Africa.

Drawing on his experience in the State Department, the World Bank, think tanks and his own consulting practice, Dr. Schneidman, a non-lawyer, has advised energy, technology, consumer and health companies, among…

Witney Schneidman has nearly 40 years of experience working across Sub-Saharan Africa.

Drawing on his experience in the State Department, the World Bank, think tanks and his own consulting practice, Dr. Schneidman, a non-lawyer, has advised energy, technology, consumer and health companies, among others, on projects in more than 30 African countries. He has also served as Deputy Assistant Secretary of State for African affairs, and on the Africa advisory committees in the Office of the U.S. Trade Representative and at the U.S. Export-Import Bank.

Dr. Schneidman provides strategic advice on the varied political, economic, social and regulatory issues that are critical to companies’ success in Africa. This includes issues related to Corporate Social Responsibility, compliance, market entry and risk mitigation. He played a leading role in the passage and recent reauthorization of the African Growth and Opportunity Act and was a delegate to the Global Entrepreneurship Summit co-hosted by President Obama during his visit to Kenya.

Dr. Schneidman chairs Covington’s Africa Practice Group and is a senior member of the firm’s Public Policy Practice Group, the International Strategy Group and the International Trade and Finance Group.