The Off-Grid Energy Access Fund (OGEF) had its first close on 2 August 2018 with committed capital of $58m from the African Development Bank, the Nordic Development Fund, the Global Environment Facility, Calvert Impact Capital and All On.
The Fund is part of the Bank’s sponsored Facility for Energy Inclusion (FEI), a $500m debt platform to mobilize capital market funds for innovative energy access strategies. The first financial close, which took place 2 August, follows the official launch of FEI at the Africa Energy Market Place (AEMP), which was held in Abidjan from 5-6 July. The initiative was presented to representatives of five African countries – Côte d’Ivoire, Ethiopia, Egypt, Nigeria and Zambia – as well as leaders from the private sector and development partner communities.
FEI is a flagship programme and part of the Bank’s New Deal on Energy for Africa, a High5 priority to light up and power the continent.
OGEF has been designed to provide flexible debt instruments to companies in the household energy access sector, including distributors, manufacturers, and end-user credit providers. The Fund promotes financially sustainable mechanisms to provide access to clean electricity for underserved households through local capital markets.
African Development Bank power, energy, climate change and green growth Vice-President Amadou Hott said: “FEI is part of a broader Bank strategy to unlock more financing in decentralized energy companies. We will keep pushing the ‘off-grid revolution’ in the African continent to achieve universal energy access by 2025.”
The Energy Fund has received significant technical and financial support from key Bank partners, namely the United Kingdom Department for International Development (UK DFID), the Power Africa initiative of the United States Government and the Shell Foundation. LHGP Asset Management, a UK Financial Conduct Authority-regulated alternative fund manager, manages OGEF.
Nordic Development Fund managing director Pasi Hellman said: “OGEF is the result of a strong partnership between our institutions and a perfect case study for making blended finance work for climate, green growth and the Sustainable Development Goals.”
LHGP, Calvert Impact Capital, All On, a Nigeria-based off-grid energy impact investment company, welcomed the finalization of the financial close as a key milestone in the provision of affordable power to unserved and underserved communities.
LHGP Partner Clemens Calice said: “The energy access sector demonstrates the vibrancy and innovation in Africa for market solutions to fundamental challenges. LHGP is excited to be the manager of OGEF and engage local capital markets towards the goal of connecting millions of households to electricity.”
African Development Bank Energy Initiatives and Partnerships Manager João Duarte Cunha said: “this broad partnership is a reaffirmation of the Bank’s catalytic role in financing renewable energy projects of all scales across Africa.”
Calvert Impact Capital president and CEO Jenn Pryce said: “OGEF squarely fits within our investment mandate of leveraging public capital at scale to create systemic change in sectors and geographies that have been overlooked by mainstream capital markets. We are excited to work with this group of committed investors to scale this facility and increase access to clean electricity for off-grid households in Africa.”
Power Africa coordinator Andrew Herscowitz said: “Power Africa is excited to support FEI. We will only achieve our ambitious goals by continuing to work closely together to promote private sector investment.”
Shell Foundation deputy director Pradeep Pursnani said: “Shell Foundation is delighted to support the first close of OGEF. We believe that these funds, blending investment from commercial and concessional investors, will make a meaningful difference to companies delivering access to energy across Africa.”
Source: Company Press Release