Out-Law News 2 min. read

International investors back expansion of Eastern African solar power projects


Berlin-based solar company Mobisol GmbH has secured new investments from the International Finance Corporation and Dutch development bank FMO to expand off-grid power sector infrastructure projects in existing and new markets in East Africa.

The IFC said on 12 December that it was making an equity investment of €5.42 million together with €9.2m from the Dutch funds AEF and Massif managed by Dutch development bank FMO.

The two investors join Investec Asset Management’s African Private Equity Fund and DEG, a subsidiary of Germany’s government-owned KfW development bank group, which have already invested in Mobisol.

“The financing will help accelerate Mobisol’s growth in existing markets in Rwanda and Tanzania and support its expansion into Kenya,” said the IFC, which is part of the World Bank Group.

IFC director for East and Southern Africa Oumar Seydi said: “IFC’s investment in Mobisol reflects our commitment to bridging the infrastructure gap and to mitigating climate change by delivering reliable, clean and affordable alternatives to fossil fuels for lower income households in sub-Saharan Africa. Our partnership... will help deliver the Mobisol solar home systems to other parts of Africa.”

Mobisol said it has already installed more than 67,000 solar home systems in Rwanda and Tanzania, “giving access to electricity and the use of efficient appliances to over 330,000 consumers”.

“The system is paid off by customers over three years via mobile money,” Mobisol said. “This innovative payment approach keeps the cost of an entry-level Mobisol system similar to what the typical customer spends on kerosene, candles, batteries, and mobile phone charging while offering superior value.”.

Mobisol founder and chief executive officer Thomas Gottschalk said: “Our partnership with IFC and FMO, alongside Investec Asset Management, marks an important milestone in the growth history of Mobisol. We are excited by the value such a reputable list of global investors stand to bring to Mobisol. We can now concentrate on scaling and even better serving our customers.”

Solar power is among a number of energy sources being explored to boost power supplies across Tanzania. The African Development Bank said last year that the Sustainable Energy Fund for Africa had approved a preparation grant for the development of a number of “solar-hybrid mini grids” in rural growth centres in Tanzania.

The IFC has said previously that the cost of solar photovoltaic (PV) technology "has fallen dramatically... and solar PV can now deliver power at less than 15 US cents per kilowatt hour (US¢/kWh) with long-term price certainty, compared to more than 25 US¢/kWh for diesel fired power that is also subject to volatility with global oil markets".

Earlier this year, the IFC said its ‘Scaling Solar’ initiative would serve as a “one-stop shop” for governments that want to attract private investors to build large-scale solar plants in sub-Saharan Africa and other regions, but lack the purchasing power of bigger emerging markets.

Scaling Solar includes a package of technical assistance, pre-approved financing, insurance products, and guarantees “that take the guesswork out of whether a solar project is viable and bankable for both governments and investors”.

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