HomeRegional NewsAfrica$1bn renewable energy facility launched for sub-Saharan Africa

$1bn renewable energy facility launched for sub-Saharan Africa

The African Trade Insurance (ATI) and European Investment Bank (EIB) have launched a $1 billion Renewable Energy Facility for sub-Saharan Africa.

The facility is supported by the government of Germany and the EU as part of their commitment to backing the UN’s Sustainable Energy for All initiative.

The facility was launched at the Berne Union Spring Meeting hosted by ATI and supported by the government of Kenya. Read more: SSA: IPPs backed by new liquidity support facility

Representing Kenya’s Cabinet Secretary for the National Treasury, Henry Rotich, and Kenya Principal Secretary for Energy Eng. Joseph Njoroge said Kenya was honoured to be hosting this important meeting of insurers that underpin a large amount of global investments and financing.

“This meeting is shining the spotlight on Africa at an opportune moment. The continent now has six of the world’s ten fastest growing economies. Add to this, Africa’s renewed emphasis on infrastructure development combined with innovation, natural resources and improved regulatory structures. Quite simply, the message we would like to relay to the global investment community through this meeting, is that Africa is brimming with opportunities.”

Njoroge added: “This facility is particularly important because it reassures financiers and investors in the energy sector in Africa that their investments are fully covered and safe and this eventually ensure the production of cheaper energy which benefits the final energy users.”

African Energy Guarantee Facility

To address the insurance gap in Africa, which is tied to an annual $20 billion shortfall in energy infrastructure investments, a risk-sharing platform called the African Energy Guarantee Facility (AEGF) was created to boost investment insurance availability by providing up to $1 billion in reinsurance capacity for African sustainable energy projects.

“Sustainable energy investment in Africa is crucial to improve access to energy, cut energy bills and enhance deployment of renewable energy. This exciting new partnership between the EIB, Munich Re and ATI combines technical, financial and sector experience and local knowledge essential to tackle investment barriers,” said EIB regional representative Catherine Collin.

“As the EU Bank the EIB is committed to supporting Sustainable Energy for All and the African Energy Guarantee Facility established a clear model for partners to join and others to follow.”

Products offered under the AEGF will include insurance against sovereign or sub-sovereign non-payment under a PPA, expropriation and breach of contract, currency inconvertibility, war, civil unrest and arbitration award default.

“As of yet, the commercial insurance market is cautious and shows limited appetite to issue such political risk protection for long tenors in Africa’s energy sector. As a consequence, private companies are discouraged from investing in Africa’s energy sector because of the discrepancy between the long-term investment needed for energy projects and the short timeframe in which the political landscape may change.

“Therefore we expect the AEGF to have a significant impact in catalysing new sustainable energy projects in Africa,” ATI chief executive officer, George Otieno explained.

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Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.