Fund hits $200m target for renewables investments in sub-Saharan Africa

Investors at the close of the fund, which is based in Nairobi and focused on sub-Saharan Africa, included the European Investment Bank (EIB) and the Global Energy Efficiency and Renewable Energy Fund.

EIB vice-president Pim van Ballekom said: “Our combined backing for the fund will provide both financial support and share technical experience essential for smaller renewable schemes being implemented for the first time.”

The fund, which the AfDB said is the first dedicated renewable energy fund for the sub-Saharan Africa region, is managed by Berkeley Energy. Berkeley, founded in 2007, focuses on developing and investing in renewable energy projects in emerging markets and is “shortly expanding into West Africa”, the AfDB said.

The AfDB and its Sustainable Energy Fund for Africa (SEFA) are the fund’s lead sponsors, with equity investment of $25m and $25.5m, respectively, together with $4.5m from the Global Environment Facility, which is supported by multilateral finance institutions including the AfDB, the Asian Development Bank and the World Bank Group.

SEFA has additionally committed a $10m ‘project support facility’ “to be deployed at an early stage to structure bankable deals”, the AfDB said. “The total AfDB-mobilised package of $65m has provided a solid foundation for attracting capital from commercial and institutional investors to the renewable energy segment in Africa.”

The fund held its first close of $100m in March 2014 and since that time “has been investing capital in grid-connected development stage renewable energy projects, including small hydro, wind, geothermal, solar and biomass projects”, the AfDB said.

A report published this year by the UN Environment Programme (86-page / 7.02 MB PDF), said Kenya set a new national record of renewable energy investment of $1.3 billion in 2014, which was “more than the combined total of the preceding three years”.

In South Africa, solar power attracted the bigger share (71%) of investment last year at $3.9bn, with the $1.6bn spent on wind, the report said.

Last February, Mainstream Renewable Power and the UK-listed private equity group Actis launched a $1.9bn “pan-African renewable energy generation platform” to boost electricity production across the continent within the next three years through investments in new wind and solar plants.

Actis said the launch of Lekela Power would provide between 700 megawatts (MW) and 900 MW of new generating capacity by 2018.

In June, leaders of West African nations launched an initiative to reform energy sector policies and create “a pipeline of bankable investment projects” to boost access to sustainable energy throughout the region. The AfDB’s vice-president for infrastructure, private sector and regional integration, Solomon Asamoah, said the West African Energy Leaders Group identified “a range of priority projects at both regional and national level for its first year”.

Cote d’Ivoire’s prime minister Daniel Kablan Duncan said the group would “focus on accelerating implementation of suitable projects by bringing together public and private-sector actors to mobilise finance”. “The emphasis will be on practical, appropriate measures that will contribute to the creation of a favourable environment for investment,” he said.