$58mn For Off-Grid Energy Fund In Africa

African Development Bank & Partners Commit $58 Million For Off-Grid Clean Energy Access Fund To Support Household Energy Access
07:00 PM (Beijing Time) - 28. August 2018
22851374998_b54271806e_k

The Off-Grid Energy Access Fund (OGEF) launched in Africa is managed by UK Financial Conduct Authority-regulated alternative fund manager, LHGP Asset Management. It aims to provide off grid clean energy access to 75 million households in Africa by 2025. (Photo Credit: Peter Kapuscinski / World Bank)

Key Takeaways

  • AfDB and its partners have committed a total of $58 million to launch Off-Grid Energy Access Fund (OGEF)
  • The fund is part of the bank’s Facility for Energy Inclusion and will address the lack of access to energy by households
  • Through OGEF, it will promote financially sustainable mechanisms and offer flexible debt instruments for companies operating in the household energy sector

The African Development Bank (AfDB) along with the Nordic Development Fund and other partners have committed a total of $58 million for the Off-Grid Energy Access Fund (OGEF), which will promote financially sustainable mechanisms to support access to clean electricity by underserved households through local capital markets.

This fund will focus on companies operating in the household energy access sector in the African continent and provide them flexible debt instruments for their work. These companies include distributors, manufacturers and end-user credit providers.

“FEI is part of a broader Bank strategy to unlock more financing in decentralized energy companies…We will keep pushing the ‘off-grid revolution’ in the African continent to achieve universal energy access by 2025,” said Amadou Hott, VP for Power, Energy, Climate Change and Green Growth.

The other partners in this fund include the United Kingdom Department for International Development (UK DFID), the Power Africa initiative of the United States Government and the Shell Foundation. According to the AfDB, LHGP Asset Management, a UK Financial Conduct Authority-regulated alternative fund manager, manages OGEF.

First financial close for OGEF took place on August 2, 2018 when the initiative was presented to five African nations of Côte d’Ivoire, Ethiopia, Egypt, Nigeria and Zambia, along with private sector and development partner communities.

The fund is part of the AfDB’s sponsored Facility for Energy Inclusion (FEI), a flagship program of the bank and part of its New Deal on Energy for Africa. It is a $500 million debt platform to mobilize capital market funds for innovative energy access strategies.

In January 2018, AfDB announced partnering with Nordic Development Fund, Global Environment Facility and Calvert Impact Capital to invest $55 million in OGEF. FEI OGEF is a $100 million blended finance debt fund to provide loans in local and hard currencies to off-grid energy companies. It aims to provide off-grid energy access solutions to 75 million households in the continent by 2025. Today 600 million still lack access to modern energy in Sub-Saharan Africa.

A July 2018 report from Global Off-Grid Lighting Association (GOGLA) on the potential of off-grid solar systems shows that 58% of households in East Africa have been able to increase work opportunities for themselves by using off-grid solar systems (see Off-Grid PV Helping Economic Upliftment In Africa).

 

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

Write, follow the author.
Email

Anu Bhambhani