Two new Nordic equity investments will support African countries to increase their clean energy production. The Nordic development fund (NDF) and Norfund have approved a total of €19m of equity investments in a responsAbility-managed Energy Holding focusing on Sub-Saharan African countries. Other investors in the company are Germany’s KfW and Switzerland’s responsAbility Investments AG.
The Energy Holding aims to increase the renewable energy supply in Sub-Saharan Africa in a responsible way while generating attractive, long-term and stable cash flows across a diversified portfolio of renewable energy plants. The company was created in December 2013 with the goal to invest in and co-develop small- and medium-sized renewable energy projects up to 50 MW at various stages of the project life cycle, from development and construction to operations.
A particular focus will be on the development stage and to facilitate bankable, long-term power purchase agreements with national grid operators. The current portfolio comprises 14 projects totalling about 160 MW in development across the region. Many of these projects fall under a feed-in tariff (FIT) programme with the local utility company as an off-taker, whereby tariffs are fixed by the government. The offering encompasses equity and quasi-equity financing. The company is managed by responsAbility Investments AG, a Zurich-based asset manager.
The company has established a Nairobi-based implementation team combining experienced power project developers with young, talented local staff. This team is developing a pipeline of projects in various African markets. These are mostly run-of-the-river hydropower projects.
Pasi Hellman, managing director of NDF, says: “NDF is proud to support renewable energy supply in Sub-Saharan Africa by focusing on the equity niche markets. The demand for energy is a key development challenge in Africa, and this project addresses the issue in a socially and environmentally responsible way. We will help to implement the projects in the pipeline and act as a catalyser for further investments by other development finance institutions as well as private investors.”
Kjell Roland, CEO at Norfund, says: “Investing in clean energy projects is a high priority for Norfund as access to energy is crucial for development and poverty reduction. This investment will give Norfund a 14% share in the holding company managed by responsAbility. In addition to being an investor, we are prepared to contribute with expertise by being an active owner and will appoint a qualified representative with board experience to the company’s board.”
Rochus Mommartz, CEO at responsAbility Investments, says: “Investment and co-development of renewable energy in small- and medium-sized projects – a niche area – in Sub-Saharan Africa are vital as they support local access to affordable clean energy and climate stability by reducing the carbon intensity of energy.”