Power Africa, a U.S. Government-led initiative, has signed an agreement with FMO, the Dutch development bank, to spur investment in renewable energy across sub-Saharan Africa.
Through the United States Agency for International Development (USAID), Power Africa will commit $5 million in support of the Climate Investor One (CIO), which finances and helps fast-track wind, solar and hydro power projects in sub-Saharan Africa.
According to Power Africa, CIO targets medium-size renewable energy projects of between 25 MW and 75 MW, and shares Power Africa’s goal to add 30,000 megawatts (MW) of new power generation capacity and 60 million new business and household connections across sub-Saharan Africa.
“Power Africa’s support of the Climate Investor One is indicative of our continued investment in renewable energy technologies throughout sub-Saharan Africa,” Power Africa Coordinator Andrew Herscowitz says.
“From wind parks in Kenya, to solar arrays in Rwanda, and geothermal generation in Ethiopia, Power Africa and our partners are putting the continent’s vast renewable resources to work. This agreement with CIO will not only help deliver new access to reliable, affordable, and sustainable electricity, it will help our African government partners boost economic development and tackle climate change at the same time”, Herscowitz adds.
Power Africa says high energy demand and the challenges presented by climate change have advanced renewable energy solutions in sub-Saharan Africa. Many countries have established or are strengthening supportive policy and regulatory frameworks for private investment of renewable energy infrastructure activities. CIO combines three innovative investment funds into one: a Development Fund to reduce development times and improve bankability of projects; a Construction Equity Fund to provide a single source of equity finance to fund construction and progress projects to an operational stage; and a Refinancing Fund to provide long-term and low risk debt during operations. The three funds together allow CIO to help early-stage climate mitigation projects achieve bankability while providing an end-to-end public-private financing solution.
Linda Broekhuizen, Chief Investment Officer of FMO, says “we are proud of our cooperation with Power Africa to accelerate and simplify the financing of renewable energy projects in Africa. CIO is an innovative climate financing structure that fits very well in our work to empowering entrepreneurs in a sustainably responsible manner.”
USAID’s funding of $5 million is expected to go directly toward renewable energy projects financed by CIO in sub-Saharan Africa.
Andrew Johnstone, CEO of Phoenix InfraWorks, and co-founder of the CIO concept says that, “basic infrastructure is a necessary foundation stone of any healthy, vibrant society, and climate change is an unavoidable truth. Climate Investor One brings together the need to address climate change on a global basis with the provision of power in geographies where development is most needed. With the collaboration of Governments and the private sector Climate Investor One points the way to mobilising sustainable capital in a manner that affects people’s lives positively. We are excited about the potential that the combination of Power Africa and Climate Investor One offers to the power deficient regions of Africa.”
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