ACEF: Unlocking the Potential for Clean, Renewable African Power
By Charlie Stadtlander, OPIC External Affairs
In February 2015, in a quiet patch of land an hour from Kigali, Rwanda, with the help of the Overseas Private Investment Corporation (OPIC) and Power Africa, energy development in Africa took a historic leap forward. With the snip of a ribbon and the flip of a switch, East Africa’s first grid-connected, utility-scale solar energy facility commenced operations, proving that a private developer supported by a focused group of governments and diverse financiers can achieve real results to address acute energy shortages in Africa.
The solar field was developed at a record pace by emerging-market solar innovator and Power Africa private sector partner Gigawatt Global, who took the plant from financial close to operation in under a year. The facility adds 8.5 megawatts of clean, renewable solar power to Rwanda’s national grid, which is a 6 percent boost to the country’s total energy generation capacity. It’s an impressive addition to the Rwandan energy supply, but also a landmark step in the overall African energy solution.
Notably, this is the first project to come online under the U.S.-Africa Clean Energy Finance (ACEF) program, which is now an integral part of President Obama’s Power Africa initiative. ACEF is funded by the U.S. State Department and the President’s Global Climate Change Initiative and carried out OPIC, the U.S. Government’s development finance institution, and the U.S. Trade and Development Agency (USTDA).
OPIC supported the Gigawatt Global project in its early stages, and thanks to this ACEF support, the project progressed to receive financing from both private lenders and international development finance institutions.
The ACEF program helps promising clean energy projects develop into viable candidates for project financing by providing small amounts of early-stage funding for essential inputs, such as technical and feasibility studies, site surveys, and legal fees. ACEF serves a catalytic role to advance these projects and attract private sector follow-on investment and fuel low-carbon economic growth in the region. These developments also give countries domestic sources of reliable and renewable power, encouraging stability through energy security.
OPIC’s intent in supporting Power Africa is not just to boost centralized megawatt energy production in Africa, but also to spread new energy access to underserved regions. ACEF projects directly address this need for new access through creative approaches to providing energy.
For example, Tanzania’s Off-Grid Electric, a pay-as-you-go home solar company is giving tens of thousands of homes new access to power that would otherwise have remained dark. With early-stage ACEF support, Off-Grid Electric helps homes to have lights for reading at night as well as the ability to charge phones and power televisions and radios.
The initial $20 million of ACEF funding has the potential to lead to more than 400 megawatts of new renewable power in Africa and could mobilize more than $1.5 billion in project capital, a ratio of $75 for every $1 from the ACEF program. Since the program’s launch, OPIC and USTDA have committed funds to 30 renewable energy projects across 10 African countries.
Recognizing the success of ACEF’s catalytic model, at the U.S.-Africa Leaders Summit in August 2014, Secretary of State John Kerry announced the U.S. State Department’s intention to invest an additional $10 million in the program.