ADB Extends $8 Mn Funds For Mini-Grid Pilot Program In Africa

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The African Development Bank Group’s Board of Directors has approved $8 million to support the rollout of a pioneering pilot mini-grid program with potential Africa-wide benefits.

The funding is provided by the Bank-managed Sustainable Energy Fund for Africa (SEFA). This fund is provided in the form of concessional loans, grants, and risk mitigation, and plans to finance up to 50 percent of mini-grid capital expenditures for the Ethiopia Distributed Renewable Energy and Agriculture Modalities (DREAM) program.

DREAM, which represents a first-of-a-kind approach for Africa’s mini-grid industry, entails a pilot that will test the commercial viability and effectiveness of a business model integrating mini-grids with agribusiness operations at 9 sites across Ethiopia.

The program was developed in collaboration with the Global Energy Alliance for People and Planet (GEAPP), which is providing co-financing, and Ethiopia’s Ministry of Water and Energy, Ministry of Irrigation and Lowlands, Ministry of Agriculture, Agricultural Transformation Institute, and other stakeholders.

The pilot’s successful conclusion will pave the way for potential scale-up and replication of the model in Ethiopia and other African countries.

“Water, energy, and food are critical for our sustainable well-being,” said Eng. Habtamu Itefa Geleta, Ethiopia’s Minister of Water and Energy. “The Ethiopian government is approaching the twin challenges of agricultural productivity and energy access with an integrated approach. We are glad to partner with the African Development Bank, through SEFA, and other project stakeholders on this innovative DREAM pilot. With the long-standing partnership we have with the Bank, my ministry reaffirms its commitment to work with all stakeholders and ensure the DREAM becomes a reality.”

GEAPP’s Interim Chief Executive Officer (CEO), Joseph Ng’ang’a, said, “GEAPP was created to address two of the defining challenges of our time – ending energy poverty and tackling the climate crisis through a just transition to renewable energy, and DREAM is a great example. Leveraging on strategic partnerships to implement the program, DREAM communities won’t just get electrification, but will also get reliable power for irrigation and clean drinking water. The program will also enable the local economy to create enormous value and accelerate rural development for close to 300,000 people.”

Daniel Schroth, the Bank Group’s Director for Renewable Energy and Energy Efficiency, said, “The DREAM project provides an innovative approach to addressing the water-energy-food nexus in Ethiopia. It demonstrates the importance of partnerships and the catalytic role played by the Sustainable Energy Fund for Africa (SEFA) in crowding in private sector investments in energy access.”