A $20 million investment has been given to the African Development Bank (AfDB) by the Clean Technology Fund to develop cleaner and more reliable energy in Africa.
This initiative came off the back of a $500 million project dedicated to providing off-grid and on-grid solar, small IPPs, mini-grids and captive installations for innovative energy solutions according to reports.
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The Facility for Energy Inclusion (FEI) On-grid project targets $400 million fund pooled from a Mauritius Partnership comprising of 35% equity and 65% debt.
Funds for the project are expected to be raised from:
- 40-60% project finance;
- 25-40% sources from corporate organizations;
- 10-20% financing proceeds to come from construction, tenor extension; and
- local currency finance.
The FEI Off-grid project is targeting $100 million fund to be pooled from a Mauritius Partnership, comprising 40%, equity and 60% debt.
Funds for the project are expected to be raised from:
- consumer debt financing;
- 40-50% medium term (2-5 year) secured and securitized receivables financing;
- 20-30% shorter tenor financing (12-24 month) secured by inventory or equivalent;
- 20-30% early stage & corporate financing; and
- local and foreign currency lending.
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The focus of the project is directed at underserved markets with the aim of:
- promoting innovative and robust transactions that create long-term market value;
- providing flexible capital on a commercial basis, including in local currency; and
- maximizing local engagement and understanding across Africa.
For these projects to be successful, more funds and investment will be needed to make energy affordable and safer for usage. Nevertheless, Anthony Nyong, the Director of Climate Change and Green Growth at the African Development Bank (AFDB) has expressed the difficulty in getting the requisite funds to light up rural areas. Stressing the benefit of renewable energy, he stated that the funds would contribute to the economic and social growth of Africa while eradicating the negative effect of climate change.
The renewable energy project is expected to create 19,000 jobs and benefit 50 million individuals.
