The African Development Bank, the European Commission, KfW, the Clean Technology Fund, Norfund, and other investors have committed nearly $160 million to the first close of the Facility for Energy Inclusion or FEI.
FEI is a targeted $400 million fund to improve energy access across Africa through small-scale renewable energy and mini-grid projects. Spearheaded by the African Development Bank, FEI serves as a financing platform to catalyze financial support for innovative energy access solutions. The Bank, as the Facility’s anchor sponsor, has put up $90 million in financing. That sum includes $20 million that the Bank is providing in its capacity as the implementing agency of the Clean Technology Fund.
“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,” said Wale Shonibare, African Development Bank Acting Vice-President of Power, Energy, Climate & Green Growth.
In addition to the Bank’s commitment, the European Commission committed €25 million to the Fund, the Norwegian Investment Fund — also known as Norfund — committed $23 million, and German Development Bank KfW committed €25 million. FEI will also include a $10 million Project Preparation Facility (PPF) from the Global Environment Facility that will provide reimbursable grants for transaction advisory to facilitate financial close.
“With our investment in this flagship fund, KfW on behalf of the German Government emphasizes its commitment to work with other development finance institutions to improve access to clean energy in Africa. Our junior equity investment aims at mobilizing public equity and private debt investors to scale up the financial means available for innovative renewable energy projects like new mini-grids to electrify Africa” said Babette Stein von Kamienski, Head of Division Infrastructure, Southern Africa at KfW.
The Facility supports small-scale Independent Power Producers (IPPs) delivering power to the grid, mini-grids and captive power projects. Projects in sub-Saharan African countries where electricity access rates are comparatively lower receive priority. Other eligibility criteria include the requirement to use renewable energy technology, to have capital expenditure of less than $30 million and generation capacity below 25MW. Initial pipeline projects have been identified in Burundi, Cape Verde, Madagascar, Malawi and Mozambique.
Original source: AfDB
Published on 16 March 2020
