The AFD Group, with the support of the European Union, has set up the “African Renewable Energy Scale-Up facility” (ARE Scale Up facility) to boost private sector investment in on–grid and off-grid renewable energy production in Africa.
To meet Africa’s constantly increasing energy requirements, support must be provided for mass development of the renewable energy technologies – especially solar energy – that will play such a key role over the coming years, given the recent drop in prices and the emergence of new innovative business models.
In particular, decentralised power generation using small scale renewables is proving to be a viable way to expand energy access. These types of models are growing rapidly in rural zones where they can provide solutions to the rural/urban energy divide and also address the needs of the poorer sections of the population. They significantly enhance living conditions for families.
To address these challenges and support renewable energy projects in Africa, the AFD Group, with the support of the European Union, has set-up the Africa Renewable Energy Scale-Up Facility aimed at sustaining the growth of the off-grid private sector in Africa. The facility has been designed to rally both public and private stakeholders, as it is composed of:
a Technical Assistance component, managed by AFD to strengthen regulatory and institutional frameworks in the countries concerned and to prepare financing of private or public sector renewable energy initiatives in Africa.
a Guarantee Facility managed by Proparco to support investment in off-grid, mini-grid and decentralised power industry players.
THE GUARANTEE FUND
The ARE Scale-up Guarantee fund will de-risk direct equity investments in pioneering businesses and prepare these companies in accessing business investors and large scale debt funding. To that end, the Fund will partially guarantee PROPARCO‘s minority equity investments in the off-grid, mini-grid and decentralised energy sector. It will also include a Technical assistance envelope to support beneficiaries in their development and inclusive growth.
This financial instrument is supported by the European Commission under its Electrification Financing Initiative. PROPARCO’s investments supported the EU-funded ARE Scale-Up Guarantee should facilitate access to energy to some one million African households and increase the Continent’s renewable energy capacity by 50MW.
INVESTMENT CRITERIA
Over the next 5 years, Proparco will provide equity or quasi-equity funding for between 5 and 10 African businesses with innovative, high-potential projects. While priority will be given to solar energy projects, other technologies (biomass, mini-hydro, etc.) will also be considered.
Companies eligible to PROPARCO’s investment should:
Have a proven business model (with strong potential for breakeven within 3 years), an experienced management team, anchor investors and be active in Africa;
Implement projects which provide access to electricity or produce decentralized power generation using small scale renewable energy;
be in an active commercial phase (ability to scale up beyond the pilot phase, proven technology, and significant customer base);
As Proparco’s action bridges the gaps of local financial systems, priority will be given to companies without easy access to other sources of finance and with a clear need for flexible interim financing solutions.
Are Scale up Facility
Interactive map
This map is for illustrative purposes only and does not engage the responsibility of the AFD Group
