AFRICA – The Facility for Energy Inclusion (FEI), a debt financing facility for small-scale energy access projects has received a further US$24 million subscription by KfW, a German state-owned development bank.
With this additional allocation, KFW on behalf of the German Ministry for Economic Cooperation and Development (BMZ) has now committed a total of US$52 million to FEI, bringing FEI’s total equity based to ca US$145 million and the total potential Fund size to just under US$400 million. FEI has now reached Final Close of its equity.
The commitment by KfW is part of BMZ’s Green people’s energy for Africa initiative, which will help meet the rising demand for energy across the African continent while fostering the productive use of renewable energy and supporting Africa on its climate-friendly development path.
The further development and strengthening of funding sources for decentralized supply solutions is critical to achieve access to energy for all in Africa and one of the cornerstones of the initiative.
FEI is designed to support small-scale Independent Power Producers (IPPs) delivering power to the grid, mini-grids, C&I and captive power projects. Priority will be given to projects in Sub-Saharan countries with lower electricity access rates.
Eligible investments are projects using renewable energy technology with a capacity up to 25MW. Since its first close in December 2019, FEI is currently executing mandated transactions in 9 countries with a total commitment exceeding US$100 million.
The African Development Bank is the anchor sponsor of FEI, with a financing contribution of just ca US$90 million, including US$20 million from the Clean Technology Fund as implementing agency.
Additional equity commitments from investors include EUR 25 million from the European Commission, US$23 million from Norfund, with a US$20 million lending facility provided by OeEB.
FEI is a US$500 million initiative capitalized by the African Development Bank, other development finance institutions and commercial investors.
Access to debt financing was identified as one of the major barriers to implementation and expansions in the off-grid, small scale RE and mini-grids segments of the energy markets.