The African Development Bank's facility for energy inclusion aimed at supporting small-scale renewable energy projects across the continent has so far attracted close to US$160 million in commitments.
The facility for energy inclusion (FEI) targets to raise US$400 million to improve access to power across Africa through small-scale renewable energy and mini-grid projects.
"The African Development Bank (AfDB), the European Commission, German Development Bank KfW, the Clean Technology Fund, Norfund, and other investors have committed nearly US$160 million to the first close of the FEI," said the regional financier in a statement.
Spearheaded by AfDB, FEI serves as a financing platform to catalyse financial support for innovative energy access solutions. The bank, as the FEI's anchor sponsor, has so far put up US$90 million in financing.
The above amount includes US$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 catalyse financing for new energy sector business models and accelerate our efforts to electrify Africa," AfDB's acting vice president of power, energy, climate and green growth, Mr Wale Shonibare, was quoted as saying. 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 US$23 million, and German Development Bank KfW committed €25 million.
FEI will also include a US$10 million Project Preparation Facility (PPF) from the Global Environment Facility that would provide reimbursable grants for transaction advisory to facilitate financial close. Executive vice president for clean energy at Norfund, Mr Mark Davis, was also quoted as saying: "Norfund is pleased to participate in this new facility, which makes debt financing available to smaller scale renewable power projects in Africa.
"We anticipate that the facility will be successful in attracting private capital to this segment of the market".
KfW noted that its investment in the FEI goes a long way mobilising 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.
The FEI supports small-scale independent power producers (IPPs) delivering power to the grid, mini-grids and captive power projects. AfDB said among others, eligibility criteria to accessing resources from the FEI include the requirement to use renewable energy technology, having capital expenditure of less than US$30 million and generation capacity below 25MW.
In this regard, it is hoped that IPPs from Zimbabwe stand to benefit from the FEI facility.
Since 2010, the country's energy regulator, the Zimbabwe Energy Regulatory Authority has licenced over 70 IPPs, a majority of whom have failed to take off due to funding constraints with Government threatening to withdraw their licenced amid concerns that some of them could be holding onto the licences for speculative purposes.