In what is positive news for the development of renewable energy in the southern Africa region, Lesotho has recently acquired a grant of almost USD 700,000 to develop a 20-megawatt solar photovoltaic (PV) plant. USD 695,000 in grant funding has been awarded to NEO I SPV, a subsidiary of OnePower Lesotho, and will be used to prepare the business case for the PV plant.
The funding was approved by the Sustainable Energy Fund for Africa (SEFA) which is managed by the African Development Bank (AfDB). AfDB’s Africa Climate Technology Centre (ACTC) will also cover the costs related to legal services and support for the implementation of the project.
According to the AfDB the SEFA “Is a multi-donor trust fund administered by the African Development Bank – anchored in a commitment of USD 60 million by the Governments of Denmark and the United States – to support small- and medium-scale Renewable Energy (RE) and Energy Efficiency (EE) projects in Africa.” It adds that “In many African countries, smaller clean/renewable energy projects are potentially viable from a commercial perspective, but the initial development costs often prevent these projects from accessing necessary financing.”
ESI Africa reports that “The Lesotho PV project will contribute around 13% to the country’s maximum system demand of around 150MW.” Furthermore, it is expected that the project will lessen Lesotho’s need to obtain coal-generated electricity from its neighbours Mozambique and South Africa. This will lead to savings in Lesotho’s national budget and will help to cut its total carbon dioxide emissions.
Commenting on the PV project, the AfDB Director for Renewable Energy and Energy Efficiency, Ousseyno Nakoulima is quoted by ESI Africa as saying “The Bank will support the structuring of the project and lead it to bankability. Our ambition is to turn it into a reference solar project for the SADC [Southern African Development Community] region.”
More generally the AfDB supports Africa’s sustainable energy agenda in three main ways. Firstly, it can provide grant financing to support medium-scale renewable energy and energy efficiency projects such as with this Lesotho PV project. Secondly, it can make equity investments to help bridge financing gaps experienced by the developers of small- and medium-sized power projects. Finally, it can offer support to the public sector to help create an environment which will attract private investments in sustainable energy.
[Cover Image: Flickr/Fihliwe]