The African Development Bank has welcomed the EUR 40 million investment from the European Commission for its Facility for Energy Inclusion (FEI), as was announced recently at the Africa Energy Forum held in Lisbon, Portugal, 11 to 14 June.

Investing in renewable energy in Africa

The Bank, the European Commission, in partnership with Lion’s Head Global Partners and Fieldstone and the Lusophone Renewable Energy Association, presented the facility to participants at the forum.

The FEI is a new USD 500 million financing platform, spearheaded by the African Development Bank, to catalyse financial support for innovative energy access solutions in Africa. FEI On-Grid, a targeted USD 400 million fund, aims to support improved energy access through the development of small-scale renewable energy generation and mini-grids across Africa; the Off-Grid Energy Access Fund (OGEF), a targeted USD 100 million fund, will support off-grid energy distribution companies and their long-term capacity to access capital markets at scale.

Joao Cunha, Manager for Renewable Energy Initiatives at the African Development Bank, said the Facility for Energy Inclusion had been developed to offer debt instruments, including in local currency, to companies providing affordable, clean and sustainable access to underserved communities in the sub-Saharan region.

“Through this facility, we aim to increase co-financing and private sector investment in innovative on-grid and off-grid clean energy access solutions, and move faster towards achieving our goal of universal energy access in Africa by 2025,” said Cunha.

The event was attended by the renewable energy investor community, including representatives from development finance institutions (DFIs), international and African commercial banks, project developers and sponsors. FEI fund managers guided project sponsors and developers through the project selection criteria and financing terms of the specific FEI windows.

In December 2018, the Directorate-General for International Cooperation and Development of the European Commission (DG DEVCO) approved an investment of EUR 25 million to the FEI On-Grid window, EUR 13 million to the FEI OGEF window, and EUR 1.6 million to support the fund’s Technical Assistance Facility, which aims to build capacity in structuring and executing transactions in African capital markets. These investments will provide junior equity to strengthen the FEI’s capital structure and enable the facility to raise funds from a range of commercial and private investors.

"The FEI is a great example of how the EU has been developing innovative financing initiatives with financial partners such as the African Development Bank, to stimulate and de-risk private sector investments. This will enable us to address the growing energy demands and provide access to sustainable energy in sub-Saharan Africa," said Hugo Van Tilborg, Head of Infrastructure, and African Development Bank Liaison at the EU.

The European Commission’s contribution underscores the African Development Bank’s focus on building strong partnerships with diverse organisations to provide a range of grant and investment instruments to fast track sustainable energy access across the continent.

The FEI’s Off-Grid window reached a $58 million first close in August 2018, with contributions from the African Development Bank, the Nordic Development Fund, the Global Environment Facility, All On and Calvert Impact Capital, Shell Foundation, USAID and the UK’s Department for International Development. The FEI On-Grid window is currently raising funds towards achieving a first close of about $120 million.

For more information visit: www.AfDB.org

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