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AfDB approves funding for medium-scale renewable IPPs

The African Development Bank has approved US$ 15 million from the Sustainable Energy Fund for Africa (SEFA) and $10 million from the Clean Technology Fund (CTF) to ad­vance African Renewable Energy Fund (AREF) II’s projects to boost low-carbon energy generation in sub­Saharan Africa. The financing will help small and medium-sized producers to add more than 800 MW of hydropower, solar and wind power, and battery storage in countries across sub-Saharan Africa, the AfDB announced on 14 December.

SEFA’s contribution will comprise a package of US$ 10 million in equity and a US$ 5 million reimbursable grant. CTF, part of the Climate Investment Funds (CIF), will provide US$ 10 million in equity. The combined contribution of US$ 20 million from SEFA and CTF will go to capitalize AREF II’s catalytic tranche. The reimbursable grant is earmarked for AREF II’s project support facility. The CTF contribution was approved by the CTF Trust Fund Committee in July last year under its Dedicated Private Sector Program (DPSP III).

Capitalizing the fund’s catalytic tranche is expected to attract critical private investment at a time of investment uncertainty and economic disruption, owing to the ongoing COVID-19 pandemic, and to ensure capital flows to support the delivery of sustainable power infrastructure to meet the region’s growing energy needs. The AREF II Project Support Facility will work to bring projects to the required level of readiness and bankability. AREF II, the second generation of the pan-African Renewable Energy Fund, is targeting a US$ 300 million market capitalization, and will be managed by Berkeley Energy, a well established renewable energy-focused fund manager in Asian and African markets.

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