AFD Group and EU reveals major support for energy projects in Africa

At the Africa CEO Forum which opened this morning in Geneva, AFD Group – in partnership with the European Union – disclosed the “African Renewable Energy Scale-Up facility”, intended to boost private sector investment in on–grid and off-grid renewable energy generation in Africa.

Also read:European Commission to enhance renewable energy in Africa

To meet Africa’s continuously growing energy requirements, support must be given for mass development of the renewable energy technologies – particularly solar energy – that will play such a vital role in the coming years, given the current drop in costs and the emergence of new ground-breaking business models.

The EU’s electrification financing initiative, “ElectriFI”, helps to harness and encourage private sector investment to improve access to renewable energy. More particularly, it emphasizes on poorly-served rural populations and regions that suffer from an undependable electricity service.

AFD Group has secured US$ 25.8 million from the fund to set up the African Renewable Energy Scale-Up (ARE Scale Up) facility. With the assistance of the European Union, AFD Group will use this loaning facility to partner the early-stage development of ground-breaking electrification projects.

While precedence will be given to solar energy projects, other technologies (biomass, mini-hydro, etc.) will also be considered.

ARE Scale-Up has been planned with a view to unlocking synergies between AFD and its private sector financing subsidiary, Proparco, and assembling stakeholders in both the public and private sectors. Of the €24 million allocation secured from the EU fund:

• US $ 12.9million will be used by AFD to deliver technical assistance amenities to reinforce regulatory and institutional outlines in the nations concerned and to prepare funding of private or public sector renewable energy initiatives in Africa.

• US $ 12.9 million will be used by Proparco to finance back-stop facilities for venture capital investments in private off-grid electricity providers (e.g. solar power kits and mini-grids). This should provide approximately one million African homes with access to energy and boost extra renewable energy capacity of 50MW for the Continent as a whole. In the next 5 years, Proparco will deliver seed funding for between 5 and 10 businesses with ground-breaking, high-potential projects.

As Emmanuelle Matz, Head of Proparco’s Energy and Infrastructure division explains “the ARE Scale-Up facility will give us with fresh resources to partly cover our risk exposure in the new off-grid solar energy sector and let us to partner other types of business models (such as mini-grids and small-scale distributed generation systems).

These types of models are rising quickly in rural zones where they can deliver solutions to the rural/urban energy divide and also tackle the needs of the poorer sections of the populace. They considerably enhance living conditions for families thanks to the positive profits in terms of health, productivity and education.”