African Development Bank Pledges $50 Million to Help Energy Access Companies Tackle COVID-19
The platform will support companies that deploy solar home systems, mini-grids, clean cooking, and other decentralized renewable energy solutions
The African Development Bank’s (AfDB) board of directors (BoD) has approved a $20 million concessional investment from the Sustainable Energy Fund for Africa (SEFA) to establish the COVID-19 off-grid recovery platform.
SEFA is an AfDB-managed special fund providing catalytic finance for renewable energy. The blended finance initiative of $50 million will provide relief and recovery capital to energy access businesses and support them through and beyond the pandemic.
The platform will support energy access companies that commercialize and deploy solar home systems, green mini-grids, clean cooking, and other decentralized renewable energy solutions through these partners.
A partnership with three specialized energy access fund managers (selected through a competitive process) will provide the platform’s foundation. These are Triple Jump, Lion’s Head Global Partners, and Social Investment Managers and Advisors.
The $20 million concessional investment will be blended with the fund managers’ capital and instruments, leveraging $30-40 million in complementary commercial funding while enabling more affordable debt products.
“The platform’s innovative co-investment structure allows fund managers like Lion’s Head to focus on what we do best – mobilizing and deploying human and financial capital to unlock sustainable power for vulnerable communities while targeting critical post-pandemic issues such as local currency funding in a period of high uncertainty and volatility,” said Harry Guinness, managing director of the Off-Grid Energy Access Fund, part of the wider’ facility for energy inclusion.’
The relief and recovery capital will support businesses in mitigating the pandemic’s impacts and ensuring a robust commercial recovery of the industry. These measures have been endorsed by leading industry associations, including the Alliance for Rural Electrification (ARE), Africa Mini-Grid Developers Association (AMDA), and the Global Off-Grid Lighting Association (GOGLA).
Dr. Kevin Kariuki, AfDBs’s vice president for power, energy, climate, and green growth, said, “This initiative underlines the African Development Bank’s commitment to the accelerated growth of Africa’s decentralized energy industry, based on renewables, as a key driver for universal energy access goals.”
According to Joao Duarte Cunha, division manager for renewable energy at AfDB, the platform would fill the market gap. Besides providing immediate relief and recovery support, the platform will lay the foundation for a green and inclusive economic recovery post-pandemic.
“The combination of funding and operational support will stabilize businesses and allow for continued investments during the COVID-19 crisis, mitigating the impact of the pandemic on energy access companies and set a sustainable trajectory for growth,” said Jan-Henrik Kuhlmann, head of sustainable energy at Triple Jump.
Previously, Mercom reported about the African country of Nigeria is currently facing one of the most significant economic downturns in its history due to COVID-19. While the country is grappling with a recession, the government has outlined an ‘Economic Sustainability Plan’ in response to the challenges posed by the COVID-19 pandemic. The plan focuses on several projects and policy approaches, which could lead to job creation across the fields of agriculture and agro-processing, renewable energy, infrastructure, manufacturing, food security, housing construction, and the digital economy. Recently, the African Union Commission and the International Renewable Energy Agency agreed to work together to promote renewable energy across the African continent and to bolster Africa’s response to the coronavirus outbreak. The two organizations will focus on innovative solutions to drive the development of renewable energy, including decentralized systems, and to increase access to energy across the continent.
Image credit: By JonStrand – Own work, CC BY-SA 4.0
Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.