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AfDB develops financing instruments for engaging off-grid sector by investing in FEI

Energy stakeholders call for new financing mechanisms to support off-grid and mini-grid connectivity in Africa

AfDB develops financing instruments for engaging off-grid sector by investing in FEI
“Solar energy is also an important contributor to the continent’s climate agenda,” Cheng said. Image Credit: Wikimedia

Energy industry stakeholders attending the 5th Energy Access Investment Forum have called for a restructuring of the financing mechanisms enabling the development of off-grid and mini-grid connectivity in Africa.

"Meeting the universal electricity access objects within the next decade will require the roll-out of off-grid and mini-grid solutions at scale," said Daniel Schroth, acting director of renewable energy & energy efficiency at the African Development Bank, in his opening remarks.

The African Development Bank has developed financing instruments for engaging the off-grid and mini-grid sector through its sponsorship and anchor investment in the Facility for Energy Inclusion (FEI), a $500 million debt financing facility targeting small scale renewable energy projects.

The 5th Energy Access Investment Forum took place from 13th to 14th March in Abidjan, Cote d'Ivoire, for the first time on the continent, with the support of the Bank, the Alliance for Rural Electrification (ARE), GET.invest (formerly the Africa-EU Renewable Energy Cooperation Programme), the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE) and UNIDO. The forum brings together public, private, and other stakeholders to encourage clean energy access globally, and particularly in Africa.

Despite Africa's significant energy resources endowments, close to 600 million people on the continent are still without access to electricity. Clearly, inadequate investment lies at the heart of Africa's energy paradox.

"This forum is certainly an opportunity for investors, project developers and other stakeholders to learn more about upcoming support schemes, innovative products and new business models to accelerate rural electrification and advance the market for decentralised renewable energies," said Marcus Wiemann, Executive Director of ARE and the 2019 Conference Chair.

Mahama Kappiah, Executive Director of ECREEE, said that lack of adequate project management in Africa's energy sector was a major drawback to private investments. "The money is not the problem. The way projects in the energy sector are prepared for financing is the problem…we need to address the institutional and regulatory issues in the energy sector so that Africa can attract more private investments," Kappiah said, during a session entitled "International Funding Initiatives to support the Off-grid Renewable Energy Sector".

In his contribution, Joao Cunha, Manager of the renewable energy initiatives division at the African Development Bank, said: "The African Development Bank has been a strong supporter of Africa's energy sector. It's a top priority…we can see that the sector is evolving as decentralised energy systems are fast expanding with the proliferation of off-grid technologies…so, de-risking investment upfront is key to attracting more investment."

Long Cheng, General Manager for Africa at Trina Solar, highlighted the importance of solar technologies in providing solutions that meet the needs of rural communities in Africa. "Solar energy is also an important contributor to the continent's climate agenda," Cheng said.

These investments need to focus on "not just off-grid but also mini-grids," argued Dominiek Deconinck, Fund Manager at Electrification Financing Initiative (ElectriFI). Business plans and discussions in this regard ought "to focus on converting interest into investments in the off-grid sector," he said.

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