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NEWS

CBEA lets loose first $5.5 million for 60 minigrids in Tanzania

CategoryPress Releases
CountryUnited Republic of Tanzania
TagsEnergy Access, Rural Electrification

Crossboundary Energy Access (CBEA) was established in January with large investment contributions from Rockefeller and Shell Foundations. The funding facility, which said it would work to unlock $11 billion in funding for the electrification of 100 million people in Africa, has penciled its first transaction with PowerGen Renewable Energy.

Crossboundary Energy Access (CBEA) claims to be Africa’s first financing facility set up for the development of mini-grids. Established in January of this year, CBEA has just announced its first transaction. Its initial $5.5 million investment will support the development of 60 mini-grids in Tanzania to serve approximately 34,000 people in rural areas.

The funding facility, established via investments from the Rockefeller Foundation and oil major Shell Foundation, inked a $3 million loan agreement with the Renewable Energy Performance Platform (REPP), a UK government-backed funding platform managed by Camco Clean Energy. According to the new transaction announcement, REPP will provide a long-term senior loan, which is structured as project finance debt.  As part of the joint financing scheme, PowerGen Renewable Energy will develop the 60 mini-grids, and soon after completion, will sell the mini-grids to CBEA.

The approach will allow CBEA will serve as the long-term owner, and PowerGen to recycle capital and focus on developing more projects. Both companies will maintain a stake in the projects’ success, as PowerGen will continue to maintain and operate the systems.

Historically, minigrid assets had been considered too small to attract long-term financing at reasonable conditions. CBEA was established to provide long-term financing for mini-grids in Africa on a project finance basis. Such type of financing had previously only been used to realize large-scale solar projects. The overarching fund seeks to unlock $11 billion to establish electrification of 100 million people. CBEA said its initial focus will be on markets with supporting regulatory frameworks, such as Tanzania, Nigeria, and Zambia.

“This first investment for CrossBoundary Energy Access is a significant step towards unlocking the private and public capital needed to scale the mini-grid sector,” stated Matt Tilleard, co-managing partner of Crossboundary Energy Access. “At Crossboundary, we believe that distributed renewables will be crucial to powering African homes, businesses, and industries. Our role is to mobilize the financing to make it happen.”

There are some 600,000 people in Sub-Saharan Africa who are currently living without electricity, marking the lowest electrification rate in the world with less than 43%. In a July 2018 report, Frost & Sullivan attested that 80% of the households without access to electricity in Sub-Saharan Africa are located in rural areas. In West Africa alone, IRENA identified a PV potential of 20 GW by 2030 to bring electricity to these rural homes, at costs more competitive than a grid connection.