Africa’s clean energy financing increases despite fewer projects approved

NAIROBI, Kenya (AP) — The African Clean Energy Fund plans to double its funding to $2.5 billion over the next two years, as momentum builds behind the continent’s energy transition.

Shares in the African Development Bank’s Sustainable Energy Fund (SEFA) for Africa increased last year, indicating renewed investor confidence in Africa’s renewables. Since its inception, the fund has raised approximately $1 billion in venture capital in addition to its commitments.

“Based on our project pipeline, we estimated that capital mobilization would increase to $2.5 billion,” said Joao Duarte Cunha, director of the bank’s renewable energy funds division and the Sustainable Energy Fund for Africa.

“By 2030, we expect our portfolio to dynamically acquire more than $10 billion in business capital,” he said.

SEFA contributions have increased to $88 million by 2025, most of which are from EU member states. That was up from $54.3 million last year, the regional lender said during its latest government council meeting.

“SEFA is proving its catalytic value on the ground with rapid approvals and deployments and growing impact,” said Kevin Kariuki, Deputy Director for Power, Energy, Climate and Green Growth at the African Development Bank Group.

The bank approved 13 renewable energy projects worth $97 million last year, compared to 14 projects worth $108 million last year.

“The last two years have been some of our strongest years yet, with 27 projects approved – broadly comparable in funding volume and significantly higher than previous years,” Kuna said.

“Demands for catalytic financing and upstream support are increasing, and we are deeply committed to driving the energy transition and global energy access by 2030,” he said.

Germany pledged $40.1 million at the COP 30 global climate summit in Brazil last year, to support SEFA’s global energy access and its green hydrogen program. Italy announced a contribution of 5.9 million dollars to this fund.

SEFA is designed to attract private investment in clean energy across the continent. Supported by donors led by Denmark, it received a total of $577 million in aid. The fund provides low-cost loans and technical assistance to expand access to energy and support sustainable development.

By 2024, SEFA has approved 14 renewable energy projects in Kenya, Nigeria, Burkina Faso, Ethiopia and Chad, adding 840 MW of generating capacity and providing 1.5 million new electricity connections. Of these projects, eight are classified as green baseload – producing the minimum amount of energy needed to meet the country’s energy demand. Two are classified as green mini-grids and four as energy efficiency initiatives.

By 2025, most approved projects also fall below the green baseload, with less grid and energy efficiency operations. In December, SEFA approved a $10 million loan to Hyphen Hydrogen Energy, a renewable energy company producing hydrogen and ammonia in Namibia. It also provided an $8.14 million guarantee for Ivory Coast’s social currency bond to pay for 400,000 new electricity connections by the end of this year.

Beyond utility-scale projects, Sefa invests in decentralized energy platforms, including mini-grid developers and private equity and debt funds focused on distributed energy, or power generation from small sources.

“We are actively testing new product lines for clean cooking and financing through commercial banks. There is real and meaningful innovation in this space,” Cunha said.

___

The Associated Press’s climate and environmental coverage receives financial support from several private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropy, a list of supporters and areas of coverage funded at AP.org.