The African Development Bank announced a €40 million ($45 million) investment from the European Commission for the Facility for Energy Inclusion (FEI), a new platform for financing small-scale renewables in Africa.
Joao Cunha, manager for renewable energy initiatives at AfDB said FEI had been developed to offer debt instruments, including in local currency, to companies providing affordable, clean and sustainable access to underserved communities in the sub-Saharan region.
“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 Cunha.
FEI is a $500 million financing platform spearheaded by the African Development Bank to catalyse financial support for innovative energy access solutions.
FEI On-grid, a targeted $400 million fund, supports improved energy access through the development of small-scale renewable energy generation and mini-grids across Africa, while the Off-Grid Energy Access Fund (OGEF), a targeted $100 million fund, supports off grid energy distribution companies and boosts their long-term capacity to access capital markets at scale.
Innovative financing initiatives
In December 2018, the Directorate-General for International Cooperation and Development of the European Commission (DG DEVCO) approved a €25 million investment to FEI On-Grid window, €13 million into the FEI OGEF window, and €1.6 million to support the Fund’s Technical Assistance Facility, which aims to build investee capacity in structuring and executing transactions in African capital markets.
These investments will provide junior equity to strengthen FEI’s capital structure, and enable FEI to fundraise from a range of commercial and private investors.
“FEI is a great example of how the EU has been developing innovative financing initiatives together with financial partners such as the African Development Bank, to stimulate and de-risk private sector investments without which we won’t be able to address the growing energy demands and provide access to sustainable energy in sub-Saharan Africa,” said Hugo Van Tilborg, head of infrastructure, and AfDB Liaison at the EU.