Period: 2016

TA provider: Climate and Energy Solutions, Artelia and Adelphi

Objectives:  

One of the key limitations for a wider project implementation of sustainable energy (“SE”) financing (including Energy Efficiency (EE) and Renewable Energy (RE)) is the lack of financial resources and proper lending facilities, particularly for medium and small-scale projects. Local financial institutions view the SE sector as higher risk, due to lack of technical capacity on the part of lenders to evaluate such projects and potential borrowers being unable to establish the bankability of their projects. SE facilities could become instrumental in attracting the attention of the financial institutions to this new field and developing a competitive market for these products.

The African Climate Technology Centre has commissioned a market study aiming at assessing the market potential for setting up a financing facility to support local financial institutions to promote small and midsize investments in the Energy Efficiency and Renewable Energy sectors in the four countries: (i) Kenya, (ii) Nigeria, (iii) South Africa and (iv) Cameroon.

The objective of the study is to map the needs related to financial and technical support for sustainable energy investments by assessing the short and medium term potential for setting-up a financing facility to support investments in sustainable energy projects such as off-grid energy access and energy efficiency projects in a selected key industries.

For each of the selected countries, the market study will involve various consultations with key stakeholders including government officials, associations, financial institutions, private companies as well as donors and investors in this area. The outcome of the study will guide the AfDB to determine the scope and required instruments as well as potential partners in each country to launch a potential market-based financing facility through collaborating with local commercial financial institutions.

 These financing facilities will be targeted to: 

i)          Enhance industrial Energy Efficiency, including in small and medium size enterprises; 

ii)         improve EE in new and existing commercial and public buildings;

iii)        fund small and medium scale RE projects; and

iv)        provide financing for working capital for off-grid products and systems (solar lamps and solar home systems) and consumer financing for pay as you go business models.

Results

Technical Assistance under development and expected to be finalized in June 2016. 

Documents