AfDB Sanctions $25 Million Fund For RE Projects in Africa

The African Development Bank Group (AfDB) has announced that it has sanctioned an equity investment of up to $25 million in ARCH Africa Renewable Power Fund (ARPF), a US$ 250 million private equity fund for renewable energy projects across Sub-Saharan Africa.

ARPF will present equity for the development and construction of 10 to 15 Greenfield renewable energy projects in Sub-Saharan Africa, adding roughly 533 MW of installed energy generation capacity from renewable sources in the region. This will present both base load and peak load power in underserved markets.

ARPF projects will focus on mature technologies including wind, solar PV, small to medium hydro, geothermal and biomass. These would embrace grid-connected independent power producers (“IPPs”), and decentralized energy projects (commercial & industrial solar, mini-grids, and solar home systems companies).

The Fund’s approach is to prioritize projects with a clear timeline to financial close, with prominence on de-risking early stage Greenfield projects. 

AfDB’s presence is projected to act as a medium for other investors to entrust additional $60-75 million equity from non-DFI sources. The Bank would also guarantee that the highest environmental and social standards, together with climate change and gender considerations, are applied to the ARPF’s projects.

“Energy investments in Africa are constrained by limited well-structured, bankable projects, as well as by unavailability of risk capital. Renewable technologies require additional support to be fully competitive over fossil fuel-based energy generation,” said Amadou Hott, the Bank’s Vice-President for Power, Energy, Climate Change & Green Growth.

“ARPF will expand the pipeline of bankable energy projects in Africa, and complement and deepen the work of the Bank in this critical area. This is vital for economic growth, and to foster a transition to low carbon across the continent,” Hott added.