At the Africa CEO Forum in Geneva, AFD Group – in partnership with the European Union – unveiled the “African Renewable Energy Scale-Up facility” (ARE Scale Up), designed to boost private sector investment in on–grid and off-grid renewable energy production in Africa.
In order to meet Africa’s constantly increasing energy requirements, support must be provided for mass development of the renewable energy technologies – especially solar energy – that will play such a key role over the coming years, given the recent drop in prices and the emergence of new innovative business models.
The EU’s electrification funding initiative, “ElectriFI”, helps to harness and stimulate private sector investment to enhance access to renewable energy. More specifically, it focuses on poorly served rural populations and regions that suffer from an unreliable electricity service.
AFD Group has secured €24 million from the fund to deploy the African Renewable Energy Scale-Up (ARE Scale Up) facility. With the help of the European Union, AFD Group will use this lending facility to partner the early-stage development of innovative electrification projects. While priority will be given to solar energy projects, other technologies (biomass, mini-hydro, etc.) will also be considered.
ARE Scale-Up has been designed with a view to unlocking synergies between AFD and its private sector financing subsidiary, Proparco, and rallying stakeholders in both the public and private sectors. Of the €24 million allocation secured from the EU fund:
This should provide around one million African households with access to energy and add additional renewable energy capacity of 50MW for the Continent as a whole. Over the next 5 years, Proparco will provide seed funding for between 5 and 10 businesses with innovative, high-potential projects.
By signing this convention, Proparco – which has been accredited by the European Commission since September 2015 – becomes one of the first DFIs to use the new resources being provided by the European Union to support private sector intervention.