Ethiopia to Cash in as AfDB Secures $170.9mln Climate Fund to Finance Renewable Energy

ADDIS ABABA – The Green Climate Fund has approved $170.9 million in co-financing for African Development Bank or AfDB’s Leveraging Energy Access Finance Framework program that aims to decentralized renewable energy in six countries.

The program, also known as LEAF, aims to unlock commercial and local-currency financing for decentralized renewable energy (DRE) projects in six program countries including Ethiopia.

AfDB said the Board of the Green Climate Fund (GCF) approved $170.9 million earlier this week.

Apart from Ethiopia, the GCF financed program aims to finance decentralized renewable energy projects in Ghana, Guinea, Kenya, Nigeria and Tunisia.

Dr. Kevin Kariuki, the AfDB’s Vice President for Power, Energy, Climate and Green Growth, said GFC’s approval “is a significant boost for the Bank’s twin ambitions in the sector.

These are, he said, accelerating electricity access and supporting the transition to clean energy on the continent using decentralized renewable energy solutions, and moreover facilitated through local financing”.

The financing is part of an overall $900 million program budget whose objective is to scale up roll-out of mini-grids, solar home systems, and commercial and industrial solar solutions in the program countries.

“GCF is delighted to partner with the African Development Bank to support this timely and critical program for decentralized renewable energy across these six African countries,” said Tony Clamp, acting Director of GCF’s Private Sector Facility.

“Green Climate Fund’s commitment will help unlock much-needed commercial capital and local currency financing to help overcome financing barriers exacerbated by Covid-19,” the acting director added.

Under LEAF, Africa’s abundant solar resources will be harnessed to provide renewable energy to 6 million people and businesses.

It will also prevent 28.8 million tonnes in CO2 emissions over the lifetime of the systems, according to the AfDB.

How it works

By deploying credit enhancement instruments and technical assistance in the program countries. LEAF will strengthen capital markets and crowd-in private sector investors including local financial institutions, AfDB said.

The fund will bolster the financial and technical capacity of investors to finance businesses in the fast growing decentralized renewable energy market segment consisting of solar home systems, green mini-grids, and solar solutions for commercial and industrial sectors.

The program will also provide requisite support to strengthen the enabling environment and increase private sector investment in this market segment, according to the Bank.