Sustainable Energy Fund for Africa (Sefa), has approved a $695 500 grant to NEO I SPV. This is to support the preparation of a profitable business case for the development of the winning project of the 2016 Lesotho 20 MW solar photovoltaic (PV) tender.
“The bank will support the structuring of the project and lead it to bankability. Our goal is to turn it into a reference solar PV project for the Southern African Development Community region.” Ousseynou Nakoulima, AfDB Renewable Energy and Energy Efficiency director stated.
Sefa’s support is important in leading the project to financial closure. This is by funding technical and financial services, environmental and social impact assessment, lenders’ due diligence and risk allocation. Additionally, The bank’s Africa Climate Technology Centre will also cover the costs for legal services and project implementation.
This project is expected to become the first utility-scale solar PV project in Lesotho. The power generated is expected to feed into the national grid in Mafeteng province. It will contribute to a strategic elimination of expensive power imports. This is because the project will contribute about 13% to Lesotho’s maximum system demand of about 150 MW.
Moreover, the substitution of 20 MW of costly imported power from Mozambique, will decrease retail electricity prices in Lesotho. It will also include greenhouse-gas emission substitution effects as a result of reducing imports of thermal-generated power from South Africa.
This will in turn promote independence of power supply, achieve substantial savings in the national budget and reduce carbon dioxide emissions in the region. It will further support rural development by maintaining the grid in Mafeteng province.
The project is in line with the AfDB’s Ten-Year Strategy focusing on inclusive and green growth through the delivery of energy access. This is the bank’s Energy Policy and the New Deal on Energy for Africa.
At national level, the project is also aligned with Lesotho’s National Electrification Master Plan. Sefa is managed by the African Development Bank.