The African Development Bank’s Board of Directors on 14th December 2020 approved 15 million dollar from the Sustainable Energy Fund for Africa and 10 million dollar from the Clean Technology Fund (CTF) to advance African Renewable Energy Fund (AREF) II’s projects to boost low-carbon energy generation in sub-Saharan Africa.
Sustainable Energy Fund for Africa’s contribution will comprise a package of 10 million dollar in equity and a 5 million dollar reimbursable grant. CTF, part of the Climate Investment Funds (CIF), will provide 10 million dollar in equity. The combined contribution of 20 million dollar from SEFA and CTF will go to capitalize AREF II’s catalytic tranche. The reimbursable grant is earmarked for AREF II’s project support facility. The CTF contribution was approved by the CTF Trust Fund Committee in July 2020 under its Dedicated Private Sector Program (DPSP III).
The financing will help medium and small sized producers to add more than 800 Mw of hydropower, solar and wind power and battery storage in countries across sub-Saharan Africa.
Capitalizing the fund’s catalytic tranche is expected to attract critical private investment at a time of investment uncertainty and economic disruption owing to the ongoing COVID-19 pandemic and to ensure capital flows to support the delivery of sustainable power infrastructure to meet the region’s increasing energy needs. AREF II Project Support Facility will work on to bring projects to the required level of readiness and bankability.
AREF II, the 2nd generation of the pan-African Renewable Energy Fund, is targeting a 300 million dollar market capitalization, and will be managed by Berkeley Energy, a well-established fund manager with huge experience investing in renewable energy projects in Asian and African markets.
“We are glad to be able to continue our company’s mission of bringing reliable renewable power to African countries and communities to support economic and social development, although also meeting the needs of our investors”, said TC Kundi, Berkeley Energy’s CEO. “The Berkeley Energy team is looking forward to working again with Sustainable Energy Fund for Africa which has played a key role in launching AREF II,” he concluded.
Sustainable Energy Fund for Africa provides catalytic finance for renewable energy to contribute to universal access to reliable, affordable, sustainable, and modern energy services for all in Africa, in line with the Bank’s New Deal on Energy for Africa and Sustainable Development Goal seven. Established in the year 2011 in partnership with the Government of Denmark, SEFA counts the USA, UK, Spain, Sweden, Germany, Italy, Norway, and the Nordic Development Fund, among its donors.
The Clean Technology Fund is a 5.4 billion dollar global fund that promotes scaled up financing for demonstration, deployment and transfer of low carbon technologies with significant potential for long term greenhouse gas emissions savings. Since the year 2010, when the Bank became an Implementing Entity of the Clean Technology Fund in 2010, it has approved over 588 million dollar in Clean Technology Fund resources for a total of ten projects across Africa.
“We welcome the participation of CTF in this project. These concessional resources will be instrumental to maximize the participation of private investors in the Fund while minimizing concessionality, with a target to support low carbon and climate resilient development in Africa,” said Director of Climate Change and Green Growth at the Bank Prof. Anthony Nyong.
