The Green Climate Fund (GCF) and the African Development Bank (AfDB) are working together to support a $154.0 million renewable energy financing framework in Zambia.
Historically, Zambia has relied on hydropower generation for 90% of its energy needs. Since 2015, Zambia has faced challenges in meeting the country’s electricity demand – a challenge that is exacerbated by climate-induced droughts that limit hydroelectric generation.
To address Zambia’s power needs, the
framework will deploy alternative energy sources by financing 100 MW renewable
energy projects, primarily small-scale solar projects. Technical assistance
will also be provided for the development of sustainable rural electrification
policies and to build the capacity of domestic financial institutions to
finance such projects.
GCF and AfDB on Thursday, November 21, 2019 signed the Funded Activity Agreement (FAA), which represents the necessary legal arrangements for the commitment of GCF’s funds.
The total financing requirement for the framework is $154 million. GCF is expected to provide $50 million in debt financing and a grant of $2.5 million to support the technical assistance component of the project. The proposal includes co-financing of $51.5 million from AfDB, as well as $50 million from banks and private sector investors.
Wale Shonibare, Ag. Vice-President, Power, Energy, Climate Change & Green Growth at the African Development Bank, said: “I am delighted to witness the signing of the African Development Bank’s first Funded Activity Agreement with the GCF. The Bank’s partnership with GCF is now delivering value, aiding the Bank’s efforts to power Africa sustainably by leveraging the continent’s vast renewable energy resources. With the FAA, we will move faster on our shared institutional goals by investing in renewable energy projects in Zambia and offering the much-needed technical assistance to crowd-in further investments into the sector. We look forward to further collaboration between our two institutions.”
“We are very excited to see the African Development Bank-GCF project in Zambia taking off. Our joint investment will enable a rapid diversification of the country’s energy system, ensuring its resilience to more frequent and severe weather events induced by climate change,” said Javier Manzanares, the Deputy Executive Director of the Green Climate Fund.
“The agreement signed today marks a new milestone in our ambitious cooperation with the AfDB, which has the potential to significantly boost our determination and action in a region dramatically affected by climate change,” he added.