Funding small-scale clean energy plants in Africa

Increasing the supply of reliable, affordable clean energy in a responsible way to rural off-grid communities, while creating long-term stable returns.

While the natural resources for clean energy production are abundant in Sub-Saharan Africa and the demand for electricity is growing constantly, there has been a shortage of available projects being implemented that are investable. The independent power producer, Serengeti Energy, with NDF support, has been addressing this gap by developing, owning and operating small- to medium-sized renewable energy plants. Its diverse portfolio includes solar and wind, and run-of-the-river hydropower, an area which is underserved by larger project developers.

Four hydropower plants were operational in 2021 – Rwaza hydro project (2.7 MW) in Rwanda, the Nyamwamba 1 (9.2 MW) and Mpanga hydro project (18 MW) in Uganda, and the REH South Africa hydro portfolio (11.5 MW). A further three projects (one hydro and two solar) are under construction, two of which are scheduled to come on stream during 2022, and another 15 pipeline projects are under development.

Smaller-scale renewable projects like these can be seen as more manageable with less environmental burden while raising the living standards and advancing the businesses of the communities they serve. NDF began financing Serengeti Energy in 2017 to help materialise its pipeline of high-quality projects, while acting as a catalyst to mobilising green capital to finance future projects.

Accelerating renewable energy projects by reducing risk

Fast-tracking climate capital flow to renewable energy infrastructure projects in Africa, Asia and Latin America.

Climate Investor One, designed and managed by Climate Fund Managers, a Netherlands-based fund management group, was set up to accelerate global climate change mitigation efforts by fast-tracking the flow of climate capital to renewable energy infrastructure projects in Africa, Asia and Latin America.

At the high-risk development phase of projects, public-sector donor funding from NDF and others is put to work to catalyse larger amounts of private-sector funding at the later construction stages. This approach is very much in keeping with the NDF strategy of investing early to smooth the way for more risk-averse commercial and institutional investors to come in later. Without this approach many potentially high-impact projects would never get off the ground.

Climate Investor One already has a number of projects that have made it to construction phase or are fully operational, which attests to the success of the financing model.

Building an inclusive approach to clean energy access

A grantee of the Energy and Environment Partnership Trust Fund (EEP Africa), a solar home system company in Malawi is empowering local women with digital tools and digital literacy.

As a Malawian woman in the energy sector, Yellow Solar Power’s co-founder and COO Maya Khonje-Stewart wanted to provide opportunities for other women in rural Malawi. But when early recruiting for solar home systems sales agents was heavily dominated by men, it quickly became clear that the main barrier for women entering the sector was a lack digital tools. For example, Yellow’s first female agent was only able to apply for the job after her husband gave her a smartphone.

This inspired Khonje-Stewart and her partner to launch a program with the goal of empowering 400 women in rural Malawi through access to digital tools and digital literacy. This was done through building the skills and job opportunities of women through four pillars: awareness, education, access, and opportunity.

The project provided smartphones to over 390 female entrepreneurs and training on the use of digital technologies. Yellow conducted almost 20 digital trainings in total that have reached 590 women, against their original target of reaching 400. The company's female agents are being promoted as examples of the economic role women can play in rural Malawi. During the project Yellow created almost 150 jobs for women (more than 140 for youth), provided more than 53,500 people (50% women) with improved access to clean energy, and reduced or avoided more than 4,140 tCO2eq in GHG emissions.

The Energy and Environment Partnership Trust Fund (EEP Africa) is a clean energy financing facility hosted and managed by the Nordic Development Fund (NDF) with funding from Austria, Finland, NDF and Switzerland. EEP Africa provides early-stage grant and catalytic financing to innovative clean energy projects, technologies and business models in 15 countries across Southern and East Africa.

Green finance pioneer in African financing

Giving African financial institutions the knowledge and capacity they need to scale up lending to the green economy.

In 2016, NDF partnered with the African Guarantee Fund (AGF) to launch the Green Guarantee Facility (GGF), a climate-focused loan guarantee designed to catalyse commercial lending to the rising number of small and medium-sized enterprises (SMEs). Since then, the Fund has enabled SME investments in sustainable energy, cleaner production, climate-smart agriculture and natural resource management, and green services, with the goal of promoting the overall sustainability of African economies, growth in green jobs, and income and quality of life for low-income communities across the continent.

GGF, which has unlocked almost EUR 120 million of financing since its launch, has shown that private sector innovation around climate resilience has the potential to reach people in ways that large-scale government investment in grid extension and climate adaptation infrastructure has so far struggled to deliver.

Close to 10,000 jobs have been created or supported during the project. This is along with clean energy generation benefitting close to 20 million people (50% women), resulting in nearly 69 million metric tons of equivalent avoided CO2.

SMEs in Africa are now coming to understand that factoring climate change into their financial and business models may be beneficial in terms of securing sustainable business growth, and AGF is a partner in facilitating this.

Clean energy access in Africa

Providing households and small businesses with off-grid power access, bringing health and social benefits for vulnerable women and children

The overall objective of this co-financed initiative of the Facility for Energy Inclusion Off-Grid Energy Access Fund’s (FEI OGEF) and NDF, is to scale-up access to affordable clean energy for off-grid small businesses and households in Sub-Saharan Africa and facilitate a long-term sustainable financing environment for off-grid energy access. This is with a particular focus on mobilising local currency financing and crowding-in local financial institutions. The fund, which launched in 2018, has also become a strong source of local employment, so far creating 1600 sustainable jobs, including more than 500 management positions for women.

Households signing up to off-grid solar solutions reported replacing an estimated 80,000 kerosene lamps (52,484 litres of kerosene) bringing potential health co-benefits from a reduced exposure to harmful emissions. An estimated 210,000 school children living in households with solar access are also able to benefit from the additional light after dark for their studies and leisure.