How alternative finance breaks the Catch-22 of floating solar

Floating solar system at Rift Valley Roses

With myriad benefits that go beyond producing clean and affordable energy, it’s no wonder that floating photovoltaic (FPV) projects are being increasingly employed around the world. Yet despite their efficacy, FPV systems are still seen as a niche technology. The impact of this is that they are underfinanced, a Catch-22 of many novel technologies; a track record is needed to secure finance, which is needed to create that track record. Can alternative finance bridge that gap?

German private investors bring floating solar to Kenya
The realisation of Kenya’s first floating solar project suggests the answer is yes. The 69 kWp project was financed by crowdinvestors in just one day, with 125 German people contributing to its success on the platform ecoligo invest. Despite the technology being recommended by the World Bank, the reluctance of institutional investors or developers to back such projects has been particularly pronounced in emerging markets: consequently, the project is one of only a handful in operation across the African continent.

Global potential
This is even more concerning when the technology’s potential in Africa – and around the globe – is considered. Agricultural businesses like Rift Valley Roses, the flower farm that now boasts Kenya’s landmark floating system, rely heavily on water for their trade and typically have reservoirs on site to store and manage rainwater. Not only do FPV systems offer efficient land use, but they reduce evaporation and could improve water quality by preventing algae bloom, too.

Crowdinvesting breaks the Catch-22
So how can crowdinvesting help to realise this potential? The funding method is fast and flexible, enabling private investors to contribute small sums to a larger project and earn interest on their investments. Speed enables quick realisation of projects that may otherwise face long wait times and stiff bureaucracy, while flexibility is important for technology like FPV that has more complexities than other types of solar energy. Thus, it interrupts the Catch-22 that slows this impactful technology from being deployed.

Construction of floating solar system at Rift Valley Roses

Crowdinvesting is no silver bullet. Like FPV technology, it is still in a niche phase and won’t bring the volumes needed to fully finance the growth expected in the sector. But it provides a necessary bridge, crucial for proving the benefits the FPV brings – benefits that are still under investigation and require more studies in varied geographies to analyse. 

Solar’s third pillar
Floating solar has been touted to become the ‘third pillar’ of solar energy, next to roof and ground mounted systems. The technology is projected to grow by 22% year on year until 2024, with 27% growth seen in 2020. Yet this is driven by Asian markets, which represent two-thirds of demand. The potential in Africa and other emerging markets has barely been touched and the finance gap that has slowed deployment of more traditional solar systems can partly be blamed.

Outlook
Floating PV technology is on an unstoppable path. It will become widespread regardless, helping utilities as well as small businesses transition to low carbon energy. But time is of the essence; the faster we can implement projects, the more CO2 emissions we avoid. Plus, some of the biggest potential is in the world’s fastest growing economies: if green energy solutions don’t arise to meet their growing needs, fossil fuels will.

The FPV system that now powers Rift Valley Roses may be the first in Kenya, but it will not be the last. As demand and interest grows, developers should look beyond traditional finance and consider the power that alternative funding holds. While crowdinvesting and floating solar may both be niche markets, the floodgates are well and truly open.

This project is being implemented as part of the dena-Renewable-Energy-Solutions-Program, which was initiated by the German Energy Agency (dena) and supported by the Federal Ministry of Economics and Energy (BMWi) as part of the “Export Initiative Energy”.