InfraCo Africa, PowerGen ink $6.9 mn pact for Sierra Leone mini-grid project
InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), has signed a SHA with PowerGen.
August 31, 2019: InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), has signed a shareholders' agreement (SHA) with PowerGen, committing $6.9 million to develop the Sierra Leone mini-grid project. As part of wider efforts by the government of Sierra Leone to address limited rural electrification, the groundbreaking project will roll out clean solar power in up to 41 remote communities, delivering first-time access to electricity for homes and businesses.
The project company, Off-grid Power, will develop a portfolio of solar mini-grids across the southern and eastern half of Sierra Leone. The project plans to establish approximately 12,500 new connections, with around 85 percent allocated to households and 15 percent to micro, small and medium enterprises and public institutions such as schools and health clinics, it is anticipated that the initiative will generate employment and will have a significant positive impact upon living standards in rural Sierra Leone.
"The Sierra Leone mini-grid project is InfraCo Africa's largest mini-grid project to date and our first project in Sierra Leone. Working with PowerGen we are delighted to bring our unique capital and expertise to this pioneering project. The project will provide access to clean energy in people's homes, promote business growth and will power improved public service provision across a large area of Sierra Leone." Peter Hutchinson, CEO, InfraCo Africa.
Through a programme financed by the United Kingdom Department for International Development (DFID) and implemented by the UN Office for Project Services (UNOPS), PowerGen is now responsible for developing off-grid power solutions in two of Sierra Leone's four geographic regions under a 20-year public-private partnership with the GoSL.
"PowerGen is proud to announce its partnership with InfraCo Africa to complete our biggest project to date: The Sierra Leone mini-grid project. As the mini-grid sector is scaling up and the asset class is increasingly accepted by long term infrastructure financiers, there is a growing need for development equity investments. With this partnership, PowerGen and InfraCo Africa aim to prove that the sector is ready for such investors to come in early, complete the project, and exit to long term project financiers, while PowerGen takes on the long-term operating role as a private utility." Tobias Dekkers, head of capital raising, PowerGen Renewable Energy.
Securing affordable risk capital has been identified as a key challenge facing the wider mini-grid industry when seeking to prove new technologies or develop and construct large portfolios. By working together, and with strong support from the government, InfraCo Africa and PowerGen hope to demonstrate a viable model for scaling access to solar mini-grids which could potentially be replicated elsewhere in the region. Aaron Leopold, CEO of the Africa Mini-grid Developers Association (AMDA), said, "This investment is an important step and signal for investors that the sector is ready to scale. A capital injection of this size is exactly what is needed to begin moving PowerGen and the sector to a new level of investment and delivery."
With all finance now in place, it is anticipated that construction will commence on the Sierra Leone mini-grid project before the end of the year, with the project delivering clean power to remote communities and businesses in 2020.