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Clean energy projects: Fund achieves first close at €130m

The Africa Renewable Energy Fund II (AREF II) has achieved its first close at €130 million, according to a statement from the African Development Bank (AfDB) on Friday, June 18, 2021.

Kevin Kariuki
Kevin Kariuki, Vice President for Power, Energy, Climate and Green Growth, AfDB

This followed a joint investment of €17.5 million from the Sustainable Energy Fund for Africa (SEFA) and the Climate Technology Fund through the AfDB.

SEFA and the Climate Technology Fund would each contribute roughly €8.7 million to mobilise private-sector investment into Africa’s renewable energy sector.

SEFA will also contribute financing to the AREF II Project Support Facility, which funds technical assistance and early-stage project support to improve bankability.

Other investors include the U.K’s CDC Group, Italy’s Cassa Depositi e Prestiti CDP, the Netherlands Development Finance Company (FMO) and SwedFund.

AREF II is a 10-year closed-ended renewable energy Private Equity Fund with a $300 million target capitalisation.

The AREF II, managed by Berkeley Energy, invests in early-stage renewable energy projects promoting increased green baseload in Africa’s generation mix.

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In 2012, the bank selected Berkeley Energy, a seasoned fund manager of clean energy projects in global emerging markets to set up AREF.

AREF II has a sharper strategic focus than its predecessor on “green baseload” projects that will deliver firm and dispatchable power to African power systems through hydro, solar, wind and battery storage technologies.

Mr Kevin Kariuki, Vice President for Power, Energy, Climate and Green Growth, AfDB, said the bank was proud to be associated with Berkeley Energy and other like-minded investors.

“We look forward to AREF’s continued success and leadership in promoting sustainable power development on the continent,” Kariuki said.

Also, Luka Buljan, Berkeley Energy’s Managing Director said: “We are very excited to have reached this milestone with strong support from our backers.

“The catalytic tranche from the Sustainable Energy Fund for Africa and the Climate Technology Fund will assist in mobilising private institutional investors up to full fund size of €300 million.”

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Buljan said the company looked forward to concluding the fundraising and delivering projects that would provide clean, reliable and affordable energy across African markets.

Joao Duarte Cunha, Manager for Renewable Energy Initiatives at the African Development Bank and Coordinator of SEFA said AREF was intertwined with the SEFA for Africa’s history and success.

“We have worked closely over the last decade to create precedents in difficult markets and challenging technologies.

“We look forward to continued collaboration to accelerate the energy transition in Africa,” he said.

According to the statement, SEFA is an AfDB-managed special fund providing catalytic finance for renewable energy.

SEFA’s overarching goal is to contribute to universal access to affordable, reliable, sustainable, and modern energy services for all in Africa, in line with the Bank’s New Deal on Energy for Africa and Sustainable Development Goal 7.

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It was established in 2011 in partnership with the Government of Denmark.

It  has since received contributions from the Governments of United States, United Kingdom, Italy, Norway, Spain, and Sweden, Nordic Development Fund and Germany.

The fund is housed in the Renewable Energy and Energy Efficiency Department (PERN) under the Power, Energy, Climate, and Green Growth (PEVP) complex.

Also, the CTF, worth $5.4 billion, is one of the two multi-donor trust funds within the wider Climate Investment Funds (CIF).

It promotes scaled-up financing for demonstration, deployment and transfer of low-carbon technologies with significant potential for long-term greenhouse gas emissions savings.

The bank became an Implementing Entity of the CIF in 2010 and since then, has approved over $588 million in CTF resources for a total of 10 projects across Africa.

By Temitope Ponle

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