In West Africa, the African Development Bank (AfDB) board of directors have approved a senior concessional loan of $25 million for Mali’s first utility-scale solar photovoltaic (PV) power plant.
According to the multilateral bank, the Segou Solar PV Project is one of the first in sub-Saharan Africa that will consist of the design, construction and operations of a 33MW power plant.
The transformational project will lead to a direct increase in the country’s installed capacity from a renewable resource and will generate 52.7GWh annually, which is said to be approximately 10% of the current generation capacity, over 25 years for a lifetime output of 1,316.75GWh.
Segou Solar PV Project
The project will be funded by the Program for Scaling Up Renewable Energy in Low Income Countries (SREP) of the Climate Investment Funds (CIF), with co-financing from the AfDB ($8.4 million) and International Finance Corporation ($8.4 million).
The project will be implemented by a special purpose vehicle that will be fully owned by the private sector under a 25-year build, own, operate and transfer concession agreement with the government of Mali and a 25-year Power Purchase Agreement with Mali’s national utility, Énergie du Mali.
AfDB’s Director of Climate Change and Green Growth, Anthony Nyong commented: “Introducing utility-scale solar PV as an energy source will enable Mali to harness its abundant solar energy potential, diversify the country’s energy mix, and increase access to cleaner energy for its citizens.”
“The project’s specific business model is a potential energy game-changer for Mali and indeed for all of West Africa. The project is a demonstration of the significant role that concessional climate finance can play in mitigating project specific risks and in addressing barriers that would otherwise hinder private sector involvement in renewable energy projects.”
Bankable solar PV projects
Nyong added: “This structure not only allows the government of Mali to allocate valuable resources to other sectors of the economy, it also smooths the way for private sector investments. It has ultimately opened the door for the industry to begin to flourish in West Africa.”
Co-task Manager and Senior Climate Finance Officer at the AfDB, Leandro Azevedo, commented:“SREP is uniquely designed to help low-income countries like Mali find ways to break down barriers to private sector engagement in renewables,”
“SREP is helping low-income countries like Mali establish bankable solar PV projects under sound regulatory frameworks and lower power generation costs, and it will ultimately contribute to reducing reliance on expensive fossil fuel imports and subsidies in power generation.”
Source: ESI Africa