The first renewable energy fund has launched to develop projects across sub-Saharan Africa.
Not only that, most of the money is being sourced from within Africa.
$100 million has been raised so far for the African Renewable Energy Fund, with a goal of doubling that this year.
"$200 million isn’t the end of it. The whole idea is that this is supposed to catalyze and crowd in other investors, so I can assure you that in a few years’ time we may be looking at $500 million to $1 billion," says Gabriel Negatu, regional director of African Development Bank.
Managed by Berkley Energy Africa, the money will support small and medium-sized independent power producers with grid-tied projects of 5-50 megawatts in size: small hydro, wind, solar, geothermal, biomass and waste gas.
The Fund will commit $10-30 million for the development stage of each project, and larger projects may be able to access larger amounts.
It will likely support the newly formed Africa Clean Energy Corridor, which 19 countries have agreed to develop to leapfrog the continent to renewable energy.
Currently, Ethiopia hosts the continent’s biggest wind farm and has plans for 800 MW of wind and 1 gigawatt of geothermal (pictured below). The Corbetti Project is a new model for developing large scale power projects in Africa and is part of the Power Africa initiative that President Obama announced last summer. South Africa has held three auctions, approving 17 renewable energy projects.
The African Development Bank is the Fund’s lead sponsor, contributing $65 million. It is also involved in a similar project, Sustainable Energy for Africa (SEFA), which is supporting the early stages of projects and brokering bankable projects.
And the Bank is heavily involved with the UN’s Sustainable Energy for All (SE4All) initiative, which is working to double energy efficiency and renewable energy worldwide by 2030, while giving every person access to electricity and safe fuels.
Other investors are: African Biofuel and Renewable Energy Company, which co-founded the African Renewable Energy Fund; West African Development Bank; Nigeria-based Ecowas Bank for Investment and Development; Dutch development bank Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.; and US-based Calvert Foundation.
Development banks are increasingly supporting clean energy, growing by a compounded 25% a year since 2007, according to Bloomberg New Energy Finance.