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The Universal Energy Facility, a results-based financing facility managed by Sustainable Energy for All (SEforALL), has now opened a new window of financing for mini-grid projects in Benin.

The Benin window of the Universal Energy Facility is funded by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).

As of 28 January 2021, companies seeking results-based finance for mini-grid projects in Benin can apply for pre-qualification to the facility. In Benin, the Universal Energy Facility will disburse grant payments to deliver over 7,000 electricity connections based on a results-based incentive of USD 433 per connection.

The opening of the facility in Benin is the next step in SEforALL’s push for catalysing faster progress on Sustainable Development Goal 7 (SDG7) through results-based financing. In October 2020, the facility opened to support mini-grid projects in Sierra Leone and Madagascar.

“A paradigm shift to results-based financing models can help put the world on track to achieve universal electrification and clean cooking access,” said Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All and Co-Chair of UN-Energy.

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Story Highlights

  • In the wake of the post-electoral crisis of 2011, only 34% of the population had access to electricity. Today, close to 94% of Ivorians are connected to the power grid.
  • Côte d’Ivoire’s decision to privatize a portion of its electricity sector paved the way for one of the continent’s most robust energy systems that continues to expand and innovate with clean energy solutions.
  • This feat would not have been possible without private sector involvement and complex financial packages.

Dawn has barely broken over the Abobo neighborhood, but CoqIvoire has been bustling with activity for hours. A group of employees in white coats are busy loading boxes onto dozens of refrigerated trucks. Every day, these trucks travel hundreds of kilometers to deliver meat and poultry products to supermarkets in Abidjan and across the country. “Our products are valued all across the country for their quality because we take great care to maintain the cold chain,” asserts Florent Nguessan, Director of Operations at CoqIvoire.  

 

Related: Chinese firm completes first rigging up for Ethiopia's 70-MW geothermal energy project

 

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Background/Context

This is a fact-finding comparative study and analysis of electricity tariffs in ECOWAS Member countries conducted by the ECOWAS Regional Electricity Regulatory Authority (ERERA) with support from the African Development Bank (the Bank) to provide requisite tariff information for stakeholders and a consistent basis for comparing tariffs across the ECOWAS region.

The Bank acknowledges the key role that related issues of tariff levels, underlying drivers of tariffs, and variations of tariffs and tariff frameworks across countries within a region play in regional electricity trade and making investment decisions. Notwithstanding the critical role of tariff information in policy and investment decisions, they are not readily available in the ECOWAS region as well as other regions on the continent.

The study is consistent with the Bank’s comprehensive approach to providing support to Regional Member Countries through the Regional Economic Communities and Regional Regulators to disseminate the requisite sector information and data to facilitate the creation of the enabling environment to attract private sector investments. In addition, it aligns with ERERA’s agenda for harmonization of policy and regulatory frameworks of ECOWAS member countries in which ERERA seeks to make national electricity markets compatible with the functioning regional electricity market through the West African Power Pool (WAPP).

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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

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