The European Commission signed today four guarantee agreements worth €216 million that will help unlock €2 billion to invest in renewables, urban infrastructure and start-ups in Africa and the Neighbourhood. The guarantees were signed with the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the German KfW Group and the Spanish development cooperation agency, Agencia Española de Cooperación Internacional para el Desarrollo (AECID), at the 4th Strategic Board meeting of the External Investment Plan (EIP).
Commenting on these financial guarantees, Jutta Urpilainen, Commissioner for International Cooperation and Development, said: “The agreements signed today, worth €216 million, will aim to unlock €2 billion in new investment in Africa and the EU Neighbourhood. These guarantees share in the risk and help mobilise and attract public and private investments. They will help boost the supply of renewable energy to communities and businesses in Africa and the EU Neighbourhood, help small businesses invest and create jobs, and make African cities more resilient to growing populations and the effects of climate change. They are an example of how the EU’s new Green Deal initiative benefits citizens of our partner countries outside the EU”.
The UK Government has announced investments worth over £50m into innovative, clean technology as the UK works with African countries to develop sustainable energy sources.
The government announced the winners of the investment packages for the continent’s clean energy infrastructure at the African Investment Summit in London on 21 January 2020, which will go towards projects that aim to provide thousands with clean energy.
The approved projects include solar farms in Kenya, geothermal power stations in Ethiopia and clean energy storage in sub-Saharan Africa. The countries will receive funding and support as UK scientists and financial experts will work with their African counterparts to realise the continent’s significant renewable energy potential. The UK will also assist the countries with attracting investment for innovative renewable projects, such as wind and solar farms.
UK-government funded programme is calling for funding applications to support women-owned and/or managed renewable energy projects in Africa.
The Renewable Energy Performance Platform (REPP) today issued a gender-themed request for proposals (RFP) targeting women-led renewable energy projects in Africa. By focusing on women in particular, UK-government funded REPP is aiming to channel sources of funding to help create equal opportunities for women in the continent’s rapidly expanding renewable energy sector.
The call follows a recent report by Global Entrepreneurship Monitor that found there are over 250 million women entrepreneurs globally, with the highest prevalence of emerging female entrepreneurs being in sub-Saharan African – and at more than double the global average.
Distributed energy service companies (DESCOs) deploying off-grid solar solutions in Sub-Saharan Africa have had limited success in raising debt from local financial institutions such as commercial banks. The high collateral requirements, high interest rates, and short tenors offered by local financial institutions are incompatible with the business models of off-grid solar companies, who need to ensure that the pricing of their products remain affordable to a customer base with extremely limited purchasing power.
While some DESCOs have been able to raise financing from other sources such as development finance institutions (DFIs) and international impact investors, these facilities and investments are often denominated in a hard currency such as the U.S. dollar or the Euro, which add a layer of currency risk given that the revenues of off-grid solar companies are in local currency. Intermediaries sponsored and/or funded by DFIs and impact investors such as the Off-Grid Window of the Facility for Energy Inclusion and SunFunder have made available a limited source of local currency financing. However, crowding local financial institutions into the sector is the only long-term solution to ensuring that DESCOs have access to the scale of capital they require.