InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), has signed a Shareholders’ Agreement (SHA) with PowerGen, committing US$6.9 million to develop the Sierra Leone Mini-Grid Project. As part of wider efforts by the Government of Sierra Leone to address limited rural electrification, the ground breaking project will roll out clean solar power in up to 41 remote communities, delivering first time access to electricity for homes and businesses.
The project company, Off-grid Power, will develop a portfolio of solar mini-grids across the southern and eastern half of Sierra Leone. The project plans to establish approximately 12,500 new connections, with around 85% allocated to households and 15% to micro, small and medium enterprises and public institutions such as schools and health clinics, it is anticipated that the initiative will generate employment and will have a significant positive impact upon living standards in rural Sierra Leone.
“The Sierra Leone Mini-grid Project is InfraCo Africa’s largest mini-grid project to date, and our first project in Sierra Leone. Working with PowerGen we are delighted to bring our unique capital and expertise to this pioneering project. The project will provide access to clean energy in people’s homes, promote business growth and will power improved public service provision across a large area of Sierra Leone.” Peter Hutchinson, CEO, InfraCo Africa.
Through a programme financed by the United Kingdom Department for International Development (DFID) and implemented by the UN Office for Project Services (UNOPS), PowerGen is now responsible for developing off-grid power solutions in two of Sierra Leone’s four geographic regions under a 20-year public-private partnership with the GoSL.
“PowerGen is proud to announce its partnership with InfraCo Africa to complete our biggest project to date: The Sierra Leone Mini-Grid Project. As the mini-grid sector is scaling up and the asset class is increasingly accepted by long term infrastructure financiers, there is a growing need for development equity investments. With this partnership, PowerGen and InfraCo Africa aim to prove that the sector is ready for such investors to come in early, complete the project, and exit to long term project financiers, while PowerGen takes on the long-term operating role as a private utility.” Tobias Dekkers, Head of Capital Raising, PowerGen Renewable Energy.
Securing affordable risk capital has been identified as a key challenge facing the wider mini-grid industry when seeking to prove new technologies or develop and construct large portfolios. By working together, and with strong support from government, InfraCo Africa and PowerGen hope to demonstrate a viable model for scaling access to solar mini-grids which could potentially be replicated elsewhere in the region. Aaron Leopold, CEO of the Africa Mini-grid Developers Association (AMDA), said that, “this investment is an important step and signal for investors that the sector is ready to scale. A capital injection of this size is exactly what is needed to begin moving PowerGen and the sector to a new level of investment and delivery.”
With all finance now in place, it is anticipated that construction will commence on the Sierra Leone Mini-grid Project before the end of the year, with the project delivering clean power to remote communities and businesses in 2020.
Source: Infraco Africa
Access to energy plays a critical role in economic development. But bad government policies have affected energy security in many developing countries. It is estimated that two out of three households (almost 600 million people) in sub-Saharan Africa have no access to electricity. Ghana has also had its challenges. A shortage of generating capacity led to rationing in 2014 and 2015, with serious consequences for the economy.
Nearly five years later the country faces the exact opposite problem: excess electricity. Ghana’s Finance Minister Ken Ofori-Atta set out the scale of the problem in his mid-year review budget on July 29. He said that the problem posed grave financial risks to Ghana’s economy. This is because the government is carrying legacy debt in the energy sector, which threatens to put a huge strain on its finances.
From 2020, West Africa will commence cross-border sale and distribution of electricity among member states of ECOWAS. This is according to Chairman of Regulatory Council of the ECOWAS Regional Electricity Regulatory Authority (ERERA), Honoré Bogler, who confirmed the development to Premium Times.
Bogler revealed this while he was in Abuja, Nigeria after the swearing in of the three-man regional regulatory council. The chairman assured that his council would reposition the power sector of the West Africa region.
Electricity access remains low in Nigeria, with 80 million people without access, particularly in rural areas. To address this challenge, Nigeria’s Rural Electrification Agency (REA) is implementing the World Bank supported Nigeria Electrification Project (NEP), aiming to scale up investment in mini grid and off-grid solutions. On April 15th, 2019, the REA launched the mini grid and solar home system components of the NEP.
The mini grid component aims to extend electricity services to 300,000 households and 30,000 enterprises in rural areas by 2023. The component is private sector led and provides viability gap subsidies to mini grid developers under two funding windows. The first window will distribute viability gap subsidies to 250 sites selected by the REA through a minimum subsidy tender to help kick-start the industry at scale. Under the second window, developers can apply for performance-based grants of US$350 per connection for sites of their choice on a rolling basis.