adminSenior Business Reporter
THE African Development Bank (AfDB) has launched a $100 million renewable energy fund to support small-scale independent power producers in sub-Saharan countries.The regional financial institution last week said the African Renewable Energy Fund (AREF), to be headquartered in Nairobi, Kenya, targets a final close of $200 million within the next 12 months to be invested in grid-connected development stage renewable energy projects.
“The African Renewable Energy Fund, a dedicated renewable energy fund focused on sub-Saharan Africa, closed on Wednesday, March 12, 2014 with $100 million of committed capital to support small to medium scale independent power producers,” said AfDB.
“The fund is targeting a final close of $200 million within the next 12 months to be invested in grid-connected development stage renewable energy projects including small hydro, wind, geothermal, solar, biomass and waste gas.”
As part of efforts to address power challenges in Zimbabwe, the government recently licensed about 20 independent power producers.
Over the years, Zimbabwe Power Company, a subsidiary of Zesa Holdings, has been experiencing electricity generation inefficiencies due to antiquated equipment and working capital constraints.
The country has a national demand of 2,200MW but was producing about 1,200MW. As of yesterday power generation stood at 1,181MW.
AREF would be managed by Berkeley Energy Africa Limited, a fund manager focused on developing and investing in renewable energy projects in emerging markets.
The fund targets IPPs with an ideal size of between five and 50 megawatts and a commitment per project of between $10 million and $30 million, with the capacity to source further funding from co-investors where necessary for a larger investment.
The regional bank is the fund’s lead sponsor, bringing $65 million in an equity investment package from its statutory resources as well as climate finance instruments such as Sustainable Energy for Africa and the Global Environment Facility to leverage commercial and institutional investment.
Sustainable Energy for Africa is expected to fund a Project Support Facility, which will provide resources to be deployed at an early stage to structure bankable deals.
“Over the past decade, the AfDB has established itself as a prime catalyst for renewable energy investment on the continent and is currently hosting the Africa Hub for the Sustainable Energy for All initiative.
“As Africa’s largest infrastructure finance partner, we understand the value of supporting both large-scale and small-scale projects as part of our strategy for Africa to promote inclusive and sustainable growth,” said AfDB regional director for the East Africa Regional Resource Centre, Gabriel Negatu.
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