The African Development Bank has approved an equity investment of up to $25 million for the African Renewable Energy Projects.
The investment is part of ARCH Africa Renewable Power Fund (ARPF), and will provide equity for the development and construction of 10 to 15 greenfield renewable energy projects in Sub-Saharan Africa, adding approximately 533MW of installed energy generation capacity from renewable sources in the region.
ARCH is a joint investment venture based in London and established in 2018 between US impact Investor JCH and Partners and the African Rainbow Capital (ARC) from South Africa.
The investment will target power generation sources such as solar photovoltaic, wind, small to medium hydro, biomass and geothermal, a move that will heighten competition between clean energy and fossil fuels on the continent.
“Energy investments in Africa are constrained by limited well-structured, bankable projects, as well as by unavailability of risk capital. Renewable technologies require additional support to be fully competitive over fossil fuel-based energy generation,” said Amadou Hott, the Bank’s Vice-President for Power, Energy, Climate Change and Green Growth.
The approval comes at a time AfDB is determined to achieve one of its high-five priorities dubbed “Light up and Power Africa.” The priority is centered on meeting the energy demands among Africa’s population of 365 million people living without access to electricity.
In the recent report International Monetary Fund listed sub-Saharan Africa among the fastest-growing economies, raising the region’s need to close its electricity deficit in a push to connect many markets to the grid and spur economic growth.