Access to Energy – Solar is Part of the Solution: Speech

Speech/statement | Date: 2018-05-15 | By Minister of International Development Nikolai Astrup at the International Solar Day 2018 (Oslo, 15 May)

Ladies and gentlemen, Friends of solar energy,

Thank you for the invitation to speak at International Solar Day 2018.

My colleague Minister of Petroleum and Energy Terje Søviknes participated at the Hydropower Norway conference just two weeks ago. These two events both illustrate how Norwegian Energy Partners, Norwep, is fulfilling its mandate to promote Norway's energy expertise in areas where we have a competitive edge.

In its work, Norwep is both helping the Norwegian renewables cluster to grow, and contributing to efforts to meet UN Sustainable Development Goal 7, which is to ensure universal access to affordable, reliable, sustainable and modern energy. The Ministry of Foreign Affairs is pleased to be one of the founders of Norwep and to have an observer on its board.

First some stocktaking. Where are we today? Let me start with some good news:

According to the UNEP report Global Trends in Renewable Energy Investment 2018, the falling costs of solar electricity are continuing to drive deployment. Worldwide, a record 98 gigawatts of new solar capacity were installed in 2017 – far more than the net additions of any other technology. In addition, solar power attracted far more investment than any other technology, at USD 160 billion, up 18 %.

A total of USD 280 billion was invested in renewables, excluding large hydropower developments, and a record 157 gigawatts of renewable power capacity were commissioned last year, up from 143 gigawatts in 2016 and far out-stripping the net 70 gigawatts of fossil fuel generating capacity that was added over the same period.

Now for the bad news. Regrettably, private sector interest in sustainable energy is lagging behind, and more private sector investment is needed to achieve SDG 7 on universal access to modern energy.

Just two weeks ago, the UNenergy progress report, Tracking SDG 7, was launched in New York.

It confirms that SDG 7 is within reach – but we must urgently step up our action.

With the current level of investment, 670 million people will still lack access to modern and sustainable energy by 2030, and 90 % of these people will be living in sub-Saharan Africa.

Investments in energy infrastructure need to be more than doubled, from today's USD 500 billion annually to around USD 1 200 billion annually.

Norway's response to this challenge is to intensify our efforts and increase our allocation to renewable energy in our development budget, in line with the target set in our white paper on the Sustainable Development Goals and Norwegian development policy.

However, increased budgets alone will not solve the problem. It is vital that the private sector plays a major role. Only with the active engagement of the private sector will it be possible to mobilise the capital, technology and expertise needed to reach the goal of universal access.

Cooperation and partnership with the private sector is a central part of Norway's development policy. We aim to use development funds as a catalyst for private investment in renewable energy.

The main barrier to private sector investment in Africa is, of course, business risk. This is associated with factors such as poor governance, corruption, ambiguous or weak legislation, inadequate institutions, and general unpredictability.

It is crucial that governments in the countries concerned carry out the necessary reforms, including developing new legislation, regulatory frameworks and so on. Norway has been a partner to many countries in processes of this kind – and we will continue to support partner countries that ask for our assistance to support reforms, develop legislation, and build capacity.

Sector reform and improved governance take time. Norad's support for feasibility studies, infrastructure and training programmes is one important contribution to risk reduction. Through this work, we can help to reduce risk for private investors in the early stages of investment projects.

However, the most important tool for promoting renewable energy in developing countries is Norfund, Norway's development finance institution, which has investment capital of more than NOK 20 billion, about half of which is invested in renewable energy. Norfund has demonstrated that investments in renewable energy in developing countries can be profitable. Based on the experience it has gained in this field, Norfund continues to build partnerships with Norwegian and international partners to encourage investments in renewable energy.

Let me also mention the support provided by Norwegian embassies and their role as door openers. Our ambassadors are asked to assist Norwegian business partners whenever needed. I encourage you to visit our embassies in the countries you are operating in to inform them about your plans and to discuss local opportunities and challenges.

Official visits can also provide business delegations with useful opportunities to establish new contacts and build networks. I was impressed by the high level of engagement of the business delegation that accompanied me on my recent visit to Ghana.

The various tools and instruments at our disposal are even more effective when they are used in combination with one another. There is a very good example of this from a recent development in Mozambique:

  • First, the Embassy engaged in the technical preparations by the Mozambique authorities for the development of solar power;
  • Scatec Solar then won the licence to develop Mocuba Solar Plant and received support from Norad for the feasibility study;
  • Following this, the Embassy provided development funding for the transmission line from the Mocuba plant to the grid;
  • Norfund then played a key role in the financial engineering, providing special guarantees and acting as an equity partner. The International Finance Corporation is involved in the financing of most Scatec Solar projects, and provided a loan to Mocuba.
  • Finally, a bottleneck relating to tax that emerged in February was eliminated following a meeting between Mozambique's Finance Minister, Norwegian State Secretary Jens Frølich Holte and Norway's Ambassador in Maputo during the Norwegian Mozambique Energy Days in March.

This is how I want to work with you.

By having close public-private dialogue and using all the instruments available, I am confident that you can grow your business, help poor people gain access to electricity, and increase the use of sustainable energy.

Investment in solar power is already substantial, and it is growing. Norwegian companies are contributing to this development.

Scatec Solar now owns power plants in South Africa, the Czech Republic, Rwanda, Jordan, Honduras, Brazil and Malawi. NB Solar is engaged in solar activities in South Africa, and Empower New Energy is developing new business models that will provide financing opportunities for smaller projects.

Sunergy is building mini-grids that give people in remote villages in Cameroon access to electricity and to the internet. Eltek and Kube Energy are building mini-grids in East Africa.

Bright Products, TechBridge Invest, Solar Village and BLC Technology are providing products and business models to improve the quality of life of poor people in remote areas.

It is impressive to see the cluster of solar companies that Norwep has mobilised for this conference. I look forward to working with you and helping to ensure that more people in Africa get access to energy.

Before I round off, let me once again stress the importance of working together. I intend to further develop the instruments we currently have at our disposal, so that development funds can effectively help businesses to succeed. In this context, I have already received valuable input from Norwep, the Confederation of Norwegian Enterprise (NHO) and the climate NGO Zero.

I am still in listening mode, so please speak up if you have any ideas about how we can forge effective renewable energy partnerships.

I wish you every success with your discussions here today, and look forward to continuing to work together to promote universal access to sustainable energy and reduce emissions.

I remain confident that achieving these goals constitute a tremendous business opportunity as well as a hugely important instrument in better lives and better societies.

Thank you and good luck!