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AFRICA: a $150 million solar green bond for the productive use of electricity

TagsEnergy Access, Finance and Investment, Renewable Energy, Rural Electrification

Several players in the financial world are subscribing to green solar bonds issued by the International Finance Corporation (IFC) and Social Investment Managers and Advisors (SIMA). The first closing of $150 million will finance productive solar energy in sub-Saharan Africa.

The green bond market is expanding to include productive solar energy. A new transaction has just been successfully completed by Social Investment Managers and Advisors (SIMA) and the International Finance Corporation (IFC), the private sector financing arm of the World Bank Group. The first financial closing of this issue recorded financing of $150 million. As part of this transaction, IFC underwrote $45 million, comprising a $25 million loan and $11 million in subordinated loans from the Finland-IFC blended climate finance program.

The Global Energy Alliance for People and Planet (GEAPP) is backing the deal with $9 million. The remaining $131 million in financing is being provided in the form of loans by the U.S. International Development Finance Corporation (DFC), the Austrian Development Bank (OeEB), the Belgian Investment Company for Developing Countries (BIO), the Financing Company for Developing Countries (FMO), the German Investment and Development Company (DEG), the subsidiary of the German Development Agency (KfW), as well as the Shell Foundation and the Schmidt Family Foundation.

Financing productive solar energy south of the Sahara

Proceeds from the bonds “will finance one of the largest impact funds focused exclusively on the development of the rooftop solar energy sector in Africa, with an emphasis on small and medium-sized enterprises, which are harder to reach”, says the IFC. Specifically, the fund will offer short-term corporate finance and project finance of up to 10 years to support the growth of small and medium-sized local developers for individual projects of less than 5 MW.

The fund will “focus on manufacturing, services, education, healthcare and agribusiness”, says the World Bank Group’s private sector financing arm. This first solar green bond issue, organized under the partnership between IFC and EIHWC, is expected to finance over 220 MW of solar energy and electricity storage projects.

According to GEAPP, the solar projects financed will generate energy savings, improve value chains and reduce fossil fuel consumption and CO2 emissions by around 4 million tonnes over the lifetime of the assets.