The African Development Bank board (AfDB) has announced the approval of a $20 million loan to the Democratic Republic of Congo (DRC). The funding will be used to support the development of renewable-energy mini-grid solutions in cities such as Isiro, Bumba and Genema, which are not connected to the country’s electricity grid.
The project “Green Mini-Grid Program” aims to serve as the pilot to a private-led electrification approach to deploy renewable-based mini-grid solutions in the country.
This financing program is expected to work in tandem with UK’s Department for International Development-backed Essor-Access to Electricity (A2E) initiative, a technical assistance program that supports the government-led mini-grid auction and project preparation. The goal is to promote private sector-led development of mini-grid projects in the region.
The Democratic Republic of the Congo has been the destination for multiple financing transactions for solar projects of late. Recently, the Export-Import Bank of India (EXIM Bank) approved $83.11 million in financing for the installation of three solar projects in the country with a total capacity of 35 MW. These projects are to be located in Karawa, Mbandaka and Lusambo provinces of the country.
AfDB will provide a mix of private and concessional resources notably from the Green Climate Fund (GCF) and other partners to the consortia that will be selected in the auction process. The Board of the GCF approved $21 million for the program during its 21st board meeting held in October 2018.
In addition, the bank also announced that it would provide $1 million Sustainable Energy Fund for Africa (SEFA) grant, a multi-donor trust fund administered by the AfDB, which will be used to give advisory services to the government of the DRC for the procurement of solar PV mini-grid systems, project feasibility studies, and regulatory framework development. The mini-grid projects will range from 3 MW to 10 MW capacity, directly connecting 21,200 households and 2,100 SMEs and public buildings.
Amadou Hott, the AfDB’s vice-president for Power, Energy, Climate Change and Green Growth said, “The innovative scheme under this program is also expected to demonstrate viability for private sector-led mini-grid financing which will open up a market for mini-grid investment in sub-Saharan Africa. We hope to replicate the same model once this pilot demonstrates success.”
Daniel Schroth, the Bank’s acting director for Renewable Energy & Energy Efficiency also added that “The long-term and concessional financing provided by the bank and the GCF, and potentially other donors, will enhance the commercial viability of the mini-grid projects while ensuring affordable tariffs. The bank’s significant commitment, which is in line with its mission to deploy well-structured, innovative financing to power the continent, will provide additional comfort to investors.”
Due to sparse grid availability in the DRC, the Congolese depend on kerosene or diesel fuel for their lamps, cookers and electricity generators. Less than 1% of rural and 35% of urban areas have access to electricity from the national grid.
The DRC “Green Mini-Grid Program” is in line with AfDB’s Energy for Africa agenda, climate change action plan, and long-term investment strategy. These initiatives focus on increasing energy access, boosting productive use of energy while encouraging individuals, public and private entities to move away from carbon-intensive power generation.
The AfDB has been making a series of investments in the renewable energy field. In January 2019, the AfDb announced an equity investment of up to $25 million in ARCH Africa Renewable Power Fund (ARPF). ARPF is a $250 million private equity fund that focuses on renewable energy projects across Sub-Saharan Africa. ARPF’s anchor investing entity is ARCH Emerging Markets Partners Ltd, a London-based emerging-market investment joint venture.
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