AfDB and Others Pledge $160 Million for Improving Energy Access in Africa
The fund is aimed at funding small scale renewable projects
To improve energy access in Africa by using small scale renewable projects and mini-grid projects, the African Development Bank (AfDB), the European Commission, KfW, the Clean Technology Fund, Norfund, and others have pledged $160 million (~₹11.84 billion) for the Facility of Energy Inclusion.
The Facility of Energy Inclusion is a $400 million (~₹29.59 billion) fund that is aimed at improving access to electricity by funding small scale renewable energy projects. Led by the African Development Bank, the fund acts as the financing platform for providing financial support to innovative energy access solutions.
The AfDB, as the primary sponsor, has put more than $90 million (~₹6.66 billion) in financing for such projects. The sum includes $20 million (~₹1.48 billion) that the bank is providing as the implementing agency of the Clean Technology Fund.
Speaking about the financing platform, Wale Shonibare, acting vice president of power, energy, and green growth at the African Development Bank, said, “After three years of hard work, we are pleased to see the second and larger piece of our energy access debt funding platform FEI up and running on the back of very significant commitments from our partners. We look forward to seeing FEI catalyze financing for new energy sector business models and accelerate our efforts to electrify Africa.”
Apart from the AfDB’s commitment, the European Union agreed to give €25 million (~$2.05 billion) to the fund, and the Norwegian investment fund, Norfund, committed $23 million (₹1.7 billion) to the fund.
Notably, the facility serves and supports small scale independent power producers who deliver power to mini-grids and captive power projects. The main aim of the facility is to provide help to the sub-Sharan African countries where access to electricity is very low.
Other eligibility criteria include the requirement to use renewable energy technology and to have a capital expenditure of less than $30 million (~₹2.22 billion) and generation capacity below 25 MW. The initial projects will be developed in Burundi, Cape Verde, Madagascar, Malawi, and Mozambique.
The Facility of Energy Inclusion is managed by the LHGP Asset Management Group.
“As a fund manager, we are excited that the limited partners have given us a flexible mandate to provide tailored financing solutions to this exciting industry, which has the potential to make green growth a reality in Africa. By focusing on smaller renewable energy producers, FEI will contribute to the electrification of Africa, in particular in more remote and traditionally neglected parts of the continent,” said Clemens Calice, Co-CEO of LHGP Asset Management.
The first close of the facility was reached on December 03, 2019.
Recently, AfDB announced that the Facility for Energy Inclusion’s Off-Grid Energy Access Fund (FEI OGEF) reached its final equity close target of $59 million (~₹4.17 billion) in committed equity capital and $36 million (~₹2.71 billion) debt facilities to promote off-grid energy access.
Earlier, the Green Climate Fund and AfDB had joined hands to support a $154 million renewable financing framework in the southern African nation of Zambia.