How frontier markets can maximise the opportunity of ESG capital
April 7, 2022
Developing a clean energy strategy is the trojan horse to the development of frontier markets

Frontier markets across Africa, the MiddleEast and South East Asia represent the next stage of the clean energy revolution. These markets are considered virgin, untapped and present valuable investment opportunities.


ESG or Environment, Social and Governance, is a new mandate aimed at developed exactly that in frontier markets across theWorld, with the aim of supporting the development of these countries. These sovereigns today are heavily reliant on imported fuel products, and unable to invest the necessary capital to meet the net zero targets being set globally.


Whilst a rush of capital in these markets is a godsend, failing to plan, is planning to fail. With most nations acrossAfrica, Middle East and South East Asia having no clear clean energy strategy, it leaves these country’s vulnerable to exploit from foreign capital. It could be argued that investments will bring greater connectivity and lower cost of energy to the markets, these markets could benefit much more with a clear long-term strategy.


The African continent presents an extremely interesting opportunity with huge land mass, high electricity costs and low connectivity. If a developing nation is looking to undertake investment it is important that evaluate how they can make the most out of this opportunity. Asa sovereign looking to implement Solar PV Projects exceeding 200MW, you would greatly benefit through the localisation of content. Utilising technology transfer arrangements with major suppliers will create jobs, develop industry that can support both domestic and export markets, increase GDP and free up capital to invest in further developments. A 200 PV module manufacturing line capital cost is in the range of 2M USD. The entity would be generating profit from the first project alone. The capital cost for an entity to manufacture structures would be about 1M USD. This alone would generate up to 30% net profit across a 200MW project.


Financiers who are looking to invest in ESG must also take these into account. Through encouraging sovereign strategies, the value that would be brought in terms of ESG but even more from potential carbon credits from the carbon saved through supporting local-content requirements.


I-kWh works with sovereigns across frontier markets to support in the development of infrastructure roadmaps through our holistic approach to financial advisory and management consultancy. We aim to optimise not only costs of energy, but develop economies. Developing manufacturing economies and planning for the knowledge economy.

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