Top Stories – April 2017

Facebook, Microsoft Mobilize $50 Million for Renewable Energy Microgrids

Facebook and Microsoft have joined with investment firm Allotrope Partners to launch a first-of-its-kind finance facility to catalyze investments in renewable energy micro-grids in underserved communities around the world. The Microgrid Investment Accelerator (MIA) will mobilize roughly $50 million between 2018 and 2020 to expand energy access in parts of India, Indonesia and East Africa.

MIA will test the commercial opportunity for micro-grids and demonstrate how concessionary finance can unlock progressively larger proportions of private capital as risks are discovered, priced and mitigated. MIA plans to accelerate the microgrid market through an ecosystem approach to finance that leverages grants and loans from foundations and development institutions to attract private-sector capital. MIA will directly deploy risk-tolerant project and corporate debt and equity, both independently and with co-investment partners. Rigorous data collection and analysis will help to prove the commercial business case for microgrid investments and findings will be made public to inform the broader investment community.

MIA is expected to accept pilot project applications in the third quarter of this year, and to begin distributing funds to selected projects next year.  

 AfDB ranks energy as top priority with focus on off-grid solutions

Between 2010 and 2013, the African Development Bank energy projects connected 560,000 African households to the electricity grid, and energy access for the continent continues to be a top priority for the African Development Bank. A series of new policies and plans are pushing for new off grid solutions, and AfDB is also scaling up its own investments with access to electricity being seen as key to the success of the other goals on AfDB President Akinwumi Adesina’s “High5” agenda, a set of priorities that includes industrialization and an improved quality of life. Experts say access is a must for African nations to compete in the global marketplace; without it, the continent will fall short of achieving development goals and encouraging investment.

In 2016, the AfDB made specific investments to strengthen Ivory Coast’s distribution and transmission networks, adding 20,000 households to the grid. The bank also supported the second phase of the “Kenya Last Mile” project that would see the AfDB provide a loan of $135 million to connect more than 300,000 Kenyan households.

The bank’s plans center around its New Deal on Energy for Africa, a plan adopted in 2016, with the aim of universal electricity access by 2025. The AfDB will aim to help governments craft better energy policies, improve local utility companies, boost donor funds, encourage off-grid and other bottom-up solutions, and accelerate regional integration, among other policies. The bank will also invest $12 billion of its capital over the next five years as part of the $60 to $90 billion it says it needs to reach its goals. In 2017, the AfDB will deploy $2 billion of its own money, along with $5 billion projected from co-investors.

A major component to the success of off-grid energy solutions will be the collaboration of off-grid providers and governments; in addition, the New Deal on Energy is looking at a range of other ideas and interventions including mini-grid solutions, whereby 50 to 200 houses are linked together on a system that is separate from the main grid. Ideally, these mini-grids would be connected to the main grid at a later date. 

Nigerian Government allocates 2 billion Naira to rural electrification fund

The Government of Nigeria, civil society and private sector joined forces last month and made powerful commitments to undertake activities that will accelerate the growth of the distributed renewable energy market— vital for reaching Nigeria’s unelectrified population, which has grown from 44 million to 75 million since 1990.

The Call to Action showcases the first ever recommendations from the Industry stakeholders under the Renewable Energy Association of Nigeria (REAN), and a range of commitments from stakeholders, including the Federal Government of Nigeria, to take action in support of DRE market growth in 2017.

The Renewable Energy Association of Nigeria (REAN) made the following recommendations:

  • Improve access to finance for DRE companies, through for example improving access to foreign exchange & increasing Central Bank of Nigeria micro, small and medium enterprise funding for DRE.
  • Raise awareness – help build demand for DRE through public awareness campaigns.
  • Consistently apply VAT & tariffs to DRE products and components.
  • Strengthen the Renewable Energy Department as the lead government agency responsible for DRE market growth.
  • Improve market data to help inform decision-making and attract investment.
  • Develop a framework for DRE quality and standards promotion.
  • Provide technical assistance and capacity building for businesses. 

The Federal Government of Nigeria Ministry of Power:

  • FGN has approved and adopted complementary enabling policies such as the National Renewable Energy and Energy Efficiency Policy (NREEP), National Renewable Energy Action Plan (REAP) and Rural Electrification Strategy and Implementation Plan (RESIP).
  • Launched the “Presidential Initiative on Rural Solar Home Lighting Systems”, in partnership with Azuri and Niger Delta Power Holding Company, which aims to provide electricity for 20,000 rural households.
  • FGN’s 2016 and 2017 budgets concentrate on completion of on-going off-grid and mini-grid demonstration projects such as 50kW Pakau Village, in Kaduna State.
  • FGN has resumed work on major base-load hydro projects at Kashimbilla 40MW with completion in 2018, Zungeru 700MW with completion in 2019, and is actively preparing for the Mambilla 3,050MW with target completion in 2024.
  • NBET executed solar power purchase agreements with solar 14 project developers with total 1,100MW with target completion date in 2017 and 2018.
  • FGN is facilitating development of hydro-electric sites in partnership with private investors starting with concession of six locations with a total capacity of 16.3MW.

Other stakeholders making commitments included the Rural Electrification Agency, DRE private companies (Nova Lumos, Azuri), civil society organizations (Global Rights, Heinrich Boll Foundation, Yar’Adua Foundation, Nigeria Economic Summit Group, Nigeria Women Trust Fund, Nigeria Investment Promotion Council), faith-based groups (Caritas, Lux Terra Leadership Foundation) and market development programs (Solar Nigeria).

$50 Million in Private Investment for Renewable Energy Projects

Five new partners have joined UN Environment’s Seed Assistance Facility, committing to invest US$50 million in clean power projects in sub-Saharan Africa and Asia. The Seed Capital Assistance Facility helps managers of private equity funds and development companies provide that necessary seed financing and enterprise assistance to early-stage clean energy project developers and entrepreneurs, filling the gap between the lack of bankable projects and available finance. The second phase of the Facility began last year and five new agreements have been signed with fund managers engaged in clean energy projects in Asia and sub-Saharan Africa.

To date, five funds have partnered with the Facility for a total capitalization of more than US$363 million, of which nearly US$35 million will go to seed investing. The Facility will provide US$15 million of additional support to help transfer this early-stage support to clean-energy entrepreneurs. The goal is to advance the Paris Agreement’s target of keeping the global temperature rise this century below 2 degrees Celsius.