On Wednesday, US Presidential initiative, Power Africa, signed an agreement with the Dutch development bank, FMO, to facilitate and drive renewable power projects across Sub-Saharan Africa.
Climate Investor One, unique finance model
Signed two days before Earth Day, the $5 million commitment will support the innovative Climate Investor One (CIO) funding model, which finances and helps fast-track wind, solar and hydro power projects in Sub-Saharan Africa, Power Africa said in a statement.
This three-fund structure, is directed at renewable power projects with a capacity between 25MW and 75MW.
“CIO combines three innovative investment funds into one: a Development Fund to reduce development times and improve bankability of projects; a Construction Equity Fund to provide a single source of equity finance to fund construction and progress projects to an operational stage; and a Refinancing Fund to provide long-term and low risk debt during operations,” Power Africa explained in a statement.
The three funds together allow CIO to help early-stage climate mitigation projects achieve bankability while providing an end-to-end public-private financing solution.
[quote]Power Africa Coordinator Andrew Herscowitz commented: “Power Africa’s support of the Climate Investor One is indicative of our continued investment in renewable energy technologies throughout Sub-Saharan Africa.
“From wind parks in Kenya, to solar arrays in Rwanda, and geothermal generation in Ethiopia, Power Africa and our partners are putting the continent’s vast renewable resources to work.”
Herscowitz added: “This agreement with CIO will not only help deliver new access to reliable, affordable, and sustainable electricity, it will help our African government partners boost economic development and tackle climate change at the same time.”
Addressing climate change starts with financial innovation
Africa has leapfrogged many traditional technologies and adopted modern advanced energy systems to help mitigate the effects of having little to no power infrastructure topped with an unbalanced climate.
However, despite ramping up policy and regulatory frameworks to support and facilitate private investment for renewable energy infrastructure, financial restraints remain a pertinent issue and root cause of delay.
Linda Broekhuizen, Chief Investment Officer of FMO, said: “We are proud of our cooperation with Power Africa to accelerate and simplify the financing of renewable energy projects in Africa. CIO is an innovative climate financing structure that fits very well in our work to empowering entrepreneurs in a sustainably responsible manner.”
Andrew Johnstone, CEO of Phoenix InfraWorks, and co-founder of the CIO concept said: “Basic infrastructure is a necessary foundation stone of any healthy, vibrant society, and climate change is an unavoidable truth.
“Climate Investor One brings together the need to address climate change on a global basis with the provision of power in geographies where development is most needed.”
Johnstone added: “With the collaboration of Governments and the private sector Climate Investor One points the way to mobilising sustainable capital in a manner that affects people’s lives positively. We are excited about the potential that the combination of Power Africa and Climate Investor One offers to the power deficient regions of Africa.”
Power Africa’s support of the CIO follows a recent MOU with the Government of Canada, and agreements with the Governments of Norway and the United Kingdom signed at COP 21 in Paris.