Introduction: The Billion-Dollar Paradox
Africa is home to a staggering paradox. The continent possesses over half of the world’s best solar resources, a vast and largely untapped source of clean power. Yet, more than 600 million people across Africa still lack access to electricity. This is not a technology problem; it is a financing problem.
2019 was the year renewable energy from solar and wind became the cheapest source of electricity world-wide. It hasn’t stopped there. In the past 5 years, global Levelized Cost of Electricity (LCOE) for fixed-axis solar PV has dropped approximately 60%. Simultaneously, utility-scale battery storage costs have dropped more than 75%. Hybrid projects, consisting of solar PV and utility-scale batteries, are now capable of providing electricity as rates below the heavily subsidized tariffs paid by consumers in most African markets, unlocking project pipelines never seen on the continent. Despite high potential returns to project financiers and investors, the challenge is to finance them.
For years, the high cost of capital—at least two to three times higher than in advanced economies—has crippled renewable energy development. The financial strain is so severe that for the five years to 2023, annual debt servicing costs across African countries have been double the level of investment in clean energy, according to the IEA. Promising projects, particularly the solar mini-grids essential for rural electrification, are additionally deemed too small or too risky to attract institutional capital.
But a surprising solution is emerging from an unexpected corner: electricity tokenization. The same distributed ledger technology (DLT), or blockchain, that powers cryptocurrencies is now being seriously explored to finance real-world infrastructure. This article explores six impactful ways this technology could rewire renewable energy finance and finally unleash Africa’s clean energy boom.
1.It Smashes the “Too Small to Invest” Barrier
One of the biggest hurdles for electrifying rural Africa is the small scale of individual projects. Institutional investors are often deterred by the modest capital requirements of a single solar mini-grid, deeming the “ticket sizes” too small to justify institutional engagement or project financing documentation and agency cost. The traditional solution—bundling projects into larger portfolios—remains mired in high, fixed transaction costs for due diligence, platform development, and legal work on a per-project basis, making aggregation inefficient and expensive for all but the largest developers.
Tokenization offers a way to digitize this aggregation facility model. It enables fractional ownership, where a physical asset like a solar installation is digitally divided into thousands of tradable units, or tokens. Each token represents a fractional claim on the asset or its future revenues.
This fundamentally democratizes investment. Instead of needing a small group of institutions to provide millions, thousands of smaller investors from around the globe can participate by purchasing tokens, effectively crowdfunding the infrastructure. This model is already gaining significant traction in other illiquid markets like real estate and private equity, proving its potential to aggregate capital for previously inaccessible assets.
2. It Reimagines ‘Investment’ as Pre-Purchased Power
Tokenization is not limited to recreating traditional debt or equity; it offers a method for de-risking capital recovery by pre-selling a project’s future output through the innovative concept of a utility token.
Consider this model applied to the Makutano pilot, a distributed solar project co-developed by Electrify.solar and Kudura Power Systems near Lake Turkana, Kenya. The project connects 500 consumers; each with a smart-meter that dispatches electricity on instruction from the developer. In this framework, the project is financed by selling ‘energy rights’ to investors: each token represents a claim on 1 kWh of future electricity. Investors fund the construction by purchasing the entire project’s supply of these tokens upfront, earning interest on their holdings – paid in the form of additional tokens – until their tokens have been sold, compensating for time and risk.
Once the grid is active, the consumer prepays for electricity using the tokens. An online secondary market is established where investors sell their tokens to local consumers—who pay via cash, mobile money, or stablecoins—or to local agents who buy in bulk for resale. Crucially, because backers are pre-purchasing a future commodity rather than a complex financial instrument, the asset is classified as a utility token, not a security. This distinction creates seamless re-selling opportunities for investors while radically reducing the cost and complexity of obtaining funding for developers.
By shifting the framework from financial investment to utility pre-purchase, this model directly aligns the interests of funders and energy consumers. It simplifies complex infrastructure finance into a global crowdfunding campaign for clean power, making participation accessible to a wider audience. This approach also enables transparent, targeted impact: specialized funders can finance specific electricity needs—from water pumps for sustainable agriculture to schools and clinics accessing AI-driven tools that significantly enhance their services—with unprecedented ease.
3. It Creates Liquid Markets for Illiquid Infrastructure
Infrastructure is one of the most illiquid asset classes in the world, a characteristic that has historically plagued African infrastructure investment. When investors fund a project like a solar mini-grid, their capital is typically locked up for years, with no easy way to exit the investment. This lack of liquidity is a major deterrent for many potential funders who are unwilling to tie up capital for a decade or more.
Tokenization directly solves this long-term exit problem. By representing ownership or utility rights as a digital token on a blockchain like Solana or Ethereum, that interest becomes tradable on a secondary market. These markets operate 24/7, allowing token holders to buy or sell their stake from anywhere in the world with a digital wallet.
This is a game-changer for infrastructure finance. It provides investors with clear and accessible exit opportunities, which significantly reduces the perceived risk of investing in long-term African renewable energy projects. This newfound liquidity makes the entire asset class far more attractive to a global pool of capital.
4. It Can Sidestep Crippling Currency Risk
A primary concern for international investors in Africa is foreign exchange (forex) risk. Investors provide capital in hard currencies like the U.S. dollar, but the energy projects they fund generate revenue in local currencies, which can be volatile. This currency mismatch creates significant uncertainty and can erode returns.
The blockchain offers a powerful solution through stablecoins. These are price-stable digital currencies (such as USDt, USDC or PYUSD) that are pegged 1-to-1 with a major fiat currency like the U.S. dollar. Institutional capital markets are increasingly adopting stablecoins for settlement and other financial workflows.
A potential model could see international investors funding an African solar project by purchasing its tokens with stablecoins. A specialized financial intermediary (or the project developer) then manages these digital dollars in an institutional-grade custody wallet, disbursing funds to pay international suppliers for components like solar panels and batteries instantly, bypassing correspondent banking delays and currency conversion fees. Token prices in the local markets can also be linked to hard currency through stablecoins, if local regulation and tariff setting allows for it. This digital-first approach is a natural evolution for a continent that has already leapfrogged traditional banking with mobile payment systems. The deep integration of platforms like M-PESA into the utility payment ecosystem demonstrates a continental readiness to adopt digital rails for managing energy transactions, setting a powerful precedent for token-based settlement.
5. It Brings Radical Transparency to a Trust-Deficit World
In some emerging mini-grid markets, a documented mistrust between private sector developers and governments can slow progress and deter investment. Blockchain, or Distributed Ledger Technology (DLT), is designed to solve this. At its core, a DLT is a “single source of truth”—an immutable, shared ledger where all transactions and ownership records are visible to all permissioned parties (such as the developer, investors, and the national regulator).
This transparency is supercharged by smart contracts: self-executing contracts with the terms of an agreement written directly into code. This allows for the automation of complex processes with unparalleled efficiency and trust. For example, a smart contract could be programmed to automatically set remuneration rates to different pools of investors based on verifiable project performance on the blockchain—such as the electricity sold to consumers over- or underperforming projections in the project’s financing model.
This replaces the use of human agents, and cumbersome, trust-intensive processes of manual reporting and auditing with real-time, immutable verification. This concept of “embedded supervision” can also allow regulators to monitor a project’s compliance in real-time by simply running a node on the network, drastically reducing manual reporting burdens and increasing investor confidence.
6. It Aligns a Wall Street Megatrend with a Critical Human Need
The tokenization of real-world assets is not a distant, theoretical concept. It is a rapidly accelerating megatrend being adopted by the world’s largest financial institutions.
- The market for tokenized real-world assets is projected to grow to approximately 18.9 trillion by 2033 (“Approaching the Tokenization Tipping Point”, Ripple & BCG, April 2025).
- As of late 2025, the total market for tokenized assets already stood at approximately $335 billion. Most of this liquidity is held in stablecoins (~$301 billion). The remaining $34 billion in Real-World Assets (RWAs) is primarily composed of Private Credit (~45%) and Tokenized U.S. Treasuries (~30%).
- Financial giants like BlackRock are already using tokenization for major investment funds, such as its BUIDL fund, which tokenizes shares in a U.S. Treasury money market portfolio (“BlackRock Launches Its First Tokenized Fund on the Ethereum Network”, BlackRock press release March, 2024). Tokenization is also applied on the back end of low-cost trading platforms, like eToro, allowing for market participation by investors with small investment sizes.
This technological and strategic shift is poised to rewire global finance. But its most profound impact may not be felt on Wall Street. The true promise of this multi-trillion-dollar financial evolution is its potential to create new, efficient, and transparent channels to direct capital toward our most fundamental human needs—like ensuring universal access to clean, reliable energy.
Conclusion: A New Toolkit for an Old Problem
Asset tokenization is not a silver bullet for Africa’s energy access challenges. However, it offers a powerful and innovative new set of tools to address the persistent problems of scale, risk, liquidity, and transparency that have constrained investment for decades. By lowering barriers, reducing friction, and building trust, it has the potential to de-risk projects and mobilize private capital at scale for the continent’s renewable energy sector.
As Abiy Ahmed, Prime Minister of Ethiopia, expressed it at the during the opening ceremony of the Second Africa Climate Summit held in Addis Ababa in September 2025:
“It is time to replace climate aid with climate investment.”
Blockchain technology provides a practical framework for making this vision a reality. It raises a powerful question: