The European Commission has committed €40 million ($45.5 million) to support AfDB’s Facility for Energy Inclusion joining several other investors such as the Nordic Development Fund, the Global Environment Facility, USAID and the UK’s Department for International Development. (Photo Credit: Etienne Ansotte/European Commission)
- AfDB has announced the launch of a new financing facility to support innovative small-scale renewable energy solutions targeting underserved communities in Sub-Saharan Africa
- Facility for Energy Inclusion (FEI) will support on-grid and off-grid renewable energy solutions with $500 million corpus
- European Commission has committed €40 million ($45.5 million) to the platform to enable it raise funds from commercial and private investors
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A new financing facility to support innovative small-scale renewable energy solutions in Africa has been launched by the African Development Bank (AfDB). Called Facility for Energy Inclusion (FEI), the new platform has a financial capacity of $500 million and will be spearheaded by the bank.
FEI has been designed and developed to offer debt instruments also in local currency to companies operating in the space to provide affordable, clean and sustainable access to underserved communities in the Sub-Saharan region.
The entire facility is divided into 2 parts, namely FEI On-Grid and Off-Grid Energy Access Fund (OGEF). While FEI On-Grid is to have $400 million to back improved energy access through small-scale renewable energy generation and mini-grid across the African continent, the OGEF with $100 million will support off-grid energy distribution companies and is aimed at boosting their long-term capacity to access capital markets at scale.
To this facility, the European Commission has committed €40 million ($45.5 million) with an aim to provide ‘junior equity to strengthen FEI’s capital structure, and enable FEI to fundraise from a range of commercial and private investors’, said the bank.
Along with the AfDB and European Commission, other contributors to the FEI include 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 bank further informed FEI On-Grid is currently fundraising towards achieving a first close of about $120 million.
“Through FEI, we aim to increase co-financing and private sector investment in innovative on-grid and off-grid clean energy access solutions, and consequently move faster on our ‘Light Up and Power Africa’ priority to achieve universal energy access in Africa by 2025,” said Manager for Renewable Energy Initiatives at the AfDB, Joao Cunha.
Earlier this year in January 2019, AfDB invested $25 million as equity for 533 MW renewable energy projects in Sub-Saharan Africa by committing it to $250 million private equity fund ARCH African Renewable Power Fund (ARPF) (see $25mn AfDB Equity For RE In Sub-Saharan Africa).