The Board of Directors of the African Development Bank has approved US$50 million framework financing for small-scale renewable energy projects in Zambia, which will help diversify Zambia’s energy generation heavily reliant on hydro-electricity.
Facing a serious electricity supply deficit due to recent droughts, Zambia’s Government launched the Renewable Energy Feed-in-Tariff (REFiT) policy in 2017 to crowd-in private investments for small-scale (up to 20MW) renewable projects. The “Global Energy Transfer Feed-in Tariffs” (GETFiT) Zambia Program has been designed to facilitate the implementation of the REFiT Policy.
The Framework aims to finance 100 MW of renewable energy projects, primarily solar PV, to be selected under the GETFiT Zambia Program.
This is the first program that will be co-financed by the Green Climate Fund (GCF) and the African Development Bank following the signing of the Accreditation Master Agreement on November 8, 2017 between the two institutions, making the Bank a credited implementer of GCF-approved projects. The Board of the GCF approved US$52.5 million for the Framework during its 19th Board Meeting in February 2018.
“This is an innovative financing framework that enables the transition to sustainable energy in Zambia and an important milestone in our partnership with the GCF,” said the African Development Bank’s Vice-President for Power, Energy, Climate and Green Growth, Amadou Hott.
The African Development Bank has placed climate change mitigation and adaptation, as well as powering Africa at the top of its agenda. The Bank’s second Climate Action Plan commits up to 40% of the Bank approvals to be classified as climate finance annually by 2020. The Bank’s New Deal on Energy for Africa strategy aims to provide universal access to energy by 2025.
Presenting the project to the Board, the Bank’s Director for Renewable Energy and Energy Efficiency, Ousseynou Nakoulima underscored the need for urgently addressing the renewable energy financing gap in Africa to promote universal energy access.
“With the support of the GCF, the Framework will foster country ownership through the active engagement of local investors, banks and entrepreneurs in the development of renewable energy projects in Zambia,” he said.
In another presentation, Wale Shonibare, Director for Energy Financial Solutions, Policy and Regulation at the Bank, said that “working closely with governments, development partners, local institutional investors as well as commercial banks, our plan is to replicate this innovative structure in other regional member states, given the urgent need to crowd in multiple sources of financing to support the rapid growth of renewable energy across the continent”
Set up in 2010 by 194 countries that are parties to the United Nations Framework Convention on Climate Change (UNFCCC), GCF is a global fund created to support the efforts of developing countries to respond to the challenge of climate change.