The African Development Bank launched a financing facility for small scale renewables in sub-Saharan Africa at the Africa Energy Forum held in Lisbon this month.
The lender said the Facility for Energy Inclusion (FEI) is its “first blended finance facility in the energy sector dedicated to increasing access to energy through renewable energy technologies”.
The facility will provide debt financing through two funds, added the bank in a press release. The off-grid facility is a “$100 million debt fund supporting the short term growth of off-grid energy access companies and catalyzing their long term capacity to access capital markets at scale”.
The on-grid credit line is a “$400 million debt fund supporting improved energy access through the development of small scale renewable energy generation projects – of less than 25 MW [generation capacity] and $30 million funding – including independent power producers, mini-grids and captive power projects across Africa”.
Through the credit lines the bank aims to jointly finance, alongside the private sector, African renewable energy solutions.
European Commission €40 million lift
The lender yesterday announced the European Commission is offering the new facility a €40 million investment approved by the bloc’s Directorate-General for International Cooperation and Development in December. The African Development Bank said the cash will enable the new lending facility to raise funds “from a range of commercial and private investors”.
“[The] FEI is a great example of how the EU has been developing innovative financing initiatives together with financial partners such as the African Development Bank to stimulate and de-risk private sector investments without which we won’t be able to address … growing energy demands and provide access to sustainable energy in sub-Saharan Africa,” said Hugo Van Tilborg, head of infrastructure and African Development Bank liaison at the EU.
The new facility’s off-grid window reached a $58 million first closure in August 2018 with contributions from the African Development Bank, the Nordic Development Fund, the Global Environment Facility, All On and Calvert Impact Capital, the Shell Foundation, the U.S. Agency for International Development and the U.K.’s Department for International Development.
The on-grid fund is raising investment towards a first closure of around $120 million.
This year the African Development Bank approved equity investment of up to $25 million for the ARCH Africa Renewable Power Fund. The private equity fund claims an investment volume of $250 million for renewable energy projects in the sub-Saharan region.
Although investment is vital for the electrification of Africa, a pivotal issue is how the business models behind newly funded projects could be repeated and scaled across the continent.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: email@example.com.