Angola Secures €1.29 Billion Loan for Renewable Mini-Grids and Grid Expansion

Angola’s Ministry of Finance has secured a loan of €1.29 billion ($1.41 billion) through the assistance of Standard Chartered Bank, UK. This funding will be utilized to implement 48 solar photovoltaic (PV) and energy storage mini-grids across various rural areas across Angola. The primary objective of this initiative is to promote self-sufficiency in energy consumption within these regions and reduce their dependence on the national power grid. Central grids are absent or very weak in most countries in Africa, making mini-grids a viable option now.

Out of the total €1.29 billion funding, German Export Credit Agency Euler Hermes is contributing €1.2 billion ($1.3 billion), while the remaining €0.09 billion ($0.098 billion) comes in the form of a commercial loan, as confirmed by the bank. Germany’s MCA Group has also joined the project, offering construction and project management services.

The mini-grids will be installed in various regions of Angola. Specifically, the Moxico province in the east, Lunda Norte and Lunda Sul in the northeast, Bie in central Angola, and Malanje province in the northwest have been selected for these initiatives. These mini-grids aim to bring sustainable energy solutions to 60 off-grid communities, benefiting around 203,000 households. The ultimate goal is to provide 100 per cent renewable energy access to these communities.

Financing will also support the expansion of the national grid in Malanje and build new lines and networks to connect other municipalities.

“This project is not only of crucial importance for Angola and sub-Saharan Africa but helps to reduce greenhouse gas emissions,” said Executive Board Member Euler Hermes, Edna Schöne. “We are pleased that many German small and medium-sized companies are involved in this project and will contribute to its success with their technology and know-how.”

In a notable trend, both Eastern and Western investors are increasingly eyeing renewable opportunities in previously underserved African nations. The continent’s vast renewable potential has spurred a surge of investments. A significant development in June 2023 was the launch of SA-H2, a dedicated blended finance fund aiming to raise $1 billion for constructing large-scale green hydrogen infrastructure in South Africa. Earlier in April, South Africa issued its first large-scale tender aimed at procuring renewable energy targeting a capacity of 3740 MW, the continent’s biggest program on renewable energy.

Earlier, in May, the Africa Finance Corporation and Japan Bank for International Cooperation (JBIC) signed a memorandum of understanding to collaborate on infrastructure projects that accelerate the energy transition in Africa. In January 2023, UAE signed a key agreement with Zambia to provide $2 billion for the development of solar power plants. The US also announced last year that it was mobilising $200bn for developing countries over the next five years as part of the PGI.