Sub Saharan Africa to get significant renewable energy investment
- 14 March 2014
LONDON: The African Renewable Energy Fund (AREF) has raised US$100 million for investment in small to medium scale independent power producers (IPPs) based in Sub-Saharan Africa.
The fund hopes to raise a further US$100 million within the next 12 months, the fund’s main investor, the African Development Bank, announced yesterday.
The Nairobi based fund has committed to distributing the funds between hydro, wind, geothermal, solar, biomass and waste gas projects ranging between 5 amd 50 MW capacity.
Each IPP project will receive financial support in the region of US$10-30 million, with the potential for further funding from co-investors if necessary.
The Renewable Energy Fund is supported by the African Development Bank which has given US$65 million to the initiative. Other notable investors include the West African Development Bank (BOAD), Ecowas Bank for Investment and Development (EBID), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), Calvert Foundation, Berkeley Energy and the African Biofuel and Renewable Energy Company (ABREC).
Berkeley Energy Africa Limited (Berkeley Energy), a fund manager which focuses on private equity investment into renewable energy projects, will manage the AREF. Managing Partner TC Kundi was “extremely pleased” to be entrusted with the managerial role. Mr Kundi stated that Berkeley Energy aims to use its “technical and financial experience to ensure that a part of Africa’s growing need for power is met through responsibly developed clean energy projects that improve the generation mix and maximize the use of local resources”.
Recent analyses have highlighted the growing demand for renewable energy among African nations. A UN endorsed report, by Globe International in partnership with the London School of Economics’ Grantham Research Institute, examined climate change regulation in 66 countries and found that the majority of the studied sub-Saharan African countries have national climate strategies in place.
Similarly, the 2014 Ernst and Young’s Renewable Energy Attractiveness Index has predicted that Ethiopian and Kenyan markets will begin to overtake the EU which has “limited growth potential”.
By Alana Ryan