The African Development Fund has approved a $24.5 million grant package for São Tomé and Príncipe, anchoring a landmark $30 million investment that will transform the island nation's energy landscape and accelerate its transition away from costly, polluting diesel power.
The Energy Transition, Efficiency, and Expansion Project (ETREEP) is an ambitious clean energy investment that aims to support the energy transition in São Tomé and Príncipe, promising to reshape daily life for more than 200,000 citizens across both islands. It is a cornerstone of São Tomé and Príncipe's National Energy Compact, committing the country to universal electrification and a 50% renewable energy share by 2030. Project implementation runs from May 2026 through November 2031.
Nearly 95% of the country's electricity generation relies on imported fossil fuels, at a production cost of $0.30 per kilowatt-hour, one of the highest in Africa. Daily power outages lasting three to four hours disrupt hospitals, schools, and businesses, while technical and commercial losses consume more than 34% of the electricity generated before it reaches a single home. ETREEP is designed to break this cycle.
The project's three components work together to build a cleaner, more reliable, and more inclusive energy system.
One thousand energy-efficient LED streetlights will replace outdated fixtures on São Tomé Island, improving public safety and reducing energy waste. The Energy Transition, Efficiency and Expansion Project will construct a new 4-megawatt peak solar photovoltaic plant, paired with a 2 MWh Battery Energy Storage System, on Príncipe Island- making it one of the world's biodiversity hotspots entirely self-sufficient based on renewable energy.
The project will rehabilitate and upgrade low-voltage networks on Príncipe Island and modernise the national dispatch centre, the nerve hub of the electricity system, to manage the integration of additional renewable energy sources. Interventions will install over 40,000 prepaid electricity meters across both islands, advancing universal access while curbing the commercial losses that undermine the utility's financial viability.
Additionally, the project will strengthen the Empresa de Água e Eletricidade (EMAE) and the Ministry of Infrastructure and Natural Resources through targeted capacity building, technical training, and consulting support, equipping both institutions to sustain these gains for years to come.
Fifty thousand households stand to benefit directly, and 2,000 new electricity connections will be created. Billing and collection rates are expected to rise from 50% to 80%, reducing the energy subsidies that strain the national budget. Non-technical losses are targeted at falling from 34% to 20%.
For women, who bear a disproportionate burden of unreliable energy, improved street lighting, cleaner household energy, and new employment opportunities offer tangible relief. For youth, who represent nearly 79% of the population and face unemployment rates as high as 22.6%, ETREEP will create direct jobs and support green skills training for 200 young people in solar and electrical maintenance.
The African Development Fund is contributing $19.02 million from its ADF-16 allocation and $5.43 million from the Transition Support Facility Pillar I. An additional $5 million in parallel financing from other partners is expected, with the Government providing in-kind support.
"This project is more than infrastructure. It is a statement of belief -- that small island nations deserve modern, sustainable energy, and that with the right partnerships, they can achieve it," Pietro Toigo, African Development Bank Country Manager for Angola and São Tomé and Príncipe, noted.
