AfDB invests in renewable energy
CBN.CO.ZA / 13 FEBRUARY 2019 - 14.58 / STAFF REPORTER
The African Development Bank has committed USD 25 million to a renewable energy investor, as part of its efforts to improve access to sustainable energy across the continent.
Investment in African renewable energy ventures is set to continue with the news that the African Development Bank (AfDB) has committed up to USD 25 million to a USD 250 million private equity fund for renewable energy projects in sub-Saharan Africa.
Renewable Energy Source: Google Images
The bank’s board approved the investment in the ARCH Africa Renewable Power Fund (ARPF), which will support the development and construction of between 10 and 15 renewable energy projects across the region, with the aim of adding 533MW of energy capacity.
The projects will include wind, solar, hydro, geothermal and biomass energy, independent power producers and off-grid production.
AfDB said it hoped its investment would encourage other non-development finance investors to commit an additional USD 60 to USD 75 million to the fund and offered a reassurance that “the highest environmental and social standards, together with climate change and gender considerations, are applied to the ARPF’s projects”.
Amadou Hott, AfDB vice-president for power, energy, climate change and green growth explained the decision in a statement: “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.”
He continued: “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 transition to low carbon across the continent.”
Improving access to energy in Africa is one of AfDB’s priorities under its ‘High 5s’ programme and last year it loaned USD 500 million to South African state energy provider Eskom and a Rwandan power project.
The fund is partly owned by London-based emerging market investor ARCH Emerging Markets Partners, itself a joint venture of South African investment vehicle African Rainbow Capital, which was itself set up as a broad-based black economic empowerment (B-BBEE) entity by businessman Patrice Motsepe.
Motsepe was recently listed by Forbes among Africa’s top 10 richest people, one of 20 billionaires on the continent.
The other part of ARCH is owned by sustainability focused private equity firm JCH & Partners, based in Chicago.
It follows recent investments in renewable energy projects by Italian company Eni, which is collaborating with the United Nations Development Programme (UNDP), the International Finance Corporation (IFC) and a last month’s partnership between Investec and an investment vehicle set up by the United Kingdom government.
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