African Development Bank, Nordic Development Fund and Partners launch Off-Grid Energy Access Fund with US$58 million
The African Development Bank, the Nordic Development Fund and other partners have committed US$ 58 million to support the Off-Grid Energy Access Fund (OGEF).
The Fund is part of the Bank’s sponsored Facility for Energy Inclusion (FEI), a US$500 million debt platform to mobilize capital market funds for innovative energy access strategies. The first financial close, which took place 2 August, follows the official launch of FEI at the Africa Energy Market Place (AEMP), which was held in Abidjan from 5-6 July. The initiative was presented to representatives of five African countries – Côte d’Ivoire, Ethiopia, Egypt, Nigeria and Zambia – as well as leaders from the private sector and development partner communities.
FEI is a flagship programme and part of the Bank’s New Deal on Energy for Africa, a High5 priority to light up and power the continent.
OGEF has been designed to provide flexible debt instruments to companies in the household energy access sector, including distributors, manufacturers, and end-user credit providers. The Fund promotes financially sustainable mechanisms to provide access to clean electricity for underserved households through local capital markets.
“FEI is part of a broader Bank strategy to unlock more financing in decentralized energy companies…We will keep pushing the ‘off-grid revolution’ in the African continent to achieve universal energy access by 2025” Amadou Hott, Vice-President for Power, Energy, Climate Change and Green Growth, said.
The Energy Fund has received significant technical and financial support from key Bank partners, namely the United Kingdom Department for International Development (UK DFID), the Power Africa initiative of the United States Government and the Shell Foundation. LHGP Asset Management, a UK Financial Conduct Authority-regulated alternative fund manager, manages OGEF.
“OGEF is the result of a strong partnership between our institutions and a perfect case study for making blended finance work for climate, green growth and the Sustainable Development Goals,” said Pasi Hellman, Managing Director at the Nordic Development Fund.
LHGP, Calvert Impact Capital, All On, a Nigeria-based off-grid energy impact investment company, welcomed the finalization of the financial close as a key milestone in the provision of affordable power to unserved and underserved communities.
“The energy access sector demonstrates the vibrancy and innovation in Africa for market solutions to fundamental challenges. LHGP is excited to be the manager of OGEF and engage local capital markets towards the goal of connecting millions of households to electricity”, said Clemens Calice, LHGP Partner.
João Duarte Cunha, Manager for Energy Initiatives and Partnerships at the Bank, further underscored that “this broad partnership is a reaffirmation of the Bank’s catalytic role in financing renewable energy projects of all scales across Africa”.
“OGEF squarely fits within our investment mandate of leveraging public capital at scale to create systemic change in sectors and geographies that have been overlooked by mainstream capital markets. We are excited to work with this group of committed investors to scale this facility and increase access to clean electricity for off-grid households in Africa,” said Jenn Pryce, President and CEO of Calvert Impact Capital.
The spirit of partnership was also echoed by Andrew Herscowitz, Coordinator for Power Africa, who noted: “Power Africa is excited to support FEI. We will only achieve our ambitious goals by continuing to work closely together to promote private sector investment.”
“Shell Foundation is delighted to support the first close of OGEF. We believe that these funds, blending investment from commercial and concessional investors, will make a meaningful difference to companies delivering access to energy across Africa,” said Pradeep Pursnani, Deputy Director, Shell Foundation.