A number of African nations are to receive a new loan to enhance solar power projects awarded by the Overseas Private Investment Corporation (OPIC).
OPIC, the US government’s development finance institution, has approved the $15 million loan a new investment vehicle managed by San Francisco and Tanzania-based solar finance business, SunFunder Inc. The loan will provide financing to companies operating in developing countries that manufacture, distribute and install solar lighting and energy systems.
The type of solar products to be introduced will range from portable solar powered lamps to 200W solar home systems to 500W diesel replacement systems. “The social impact of having bright, durable and safe energy will enable businesses to stay open longer and allow children to study at night.”
Ryan Levinson, SunFunder’s Chief Executive Office, and Founder said: “To support solar’s growth in emerging markets, access to sector-specific financing is key. OPIC’s investment in SunFunder’s ‘Beyond The Grid Solar Fund’ will help expand our ability to respond to the financing gap that exists for off-grid and grid-deficit solar. Getting this kind of support and validation from OPIC will open up more opportunities not only for solar enterprises but also for investors worldwide.”
The loan is one of the latest financial investments by the US in support of Africa-based development initiatives, aimed at supporting regional entrepreneurs and improving power infrastructure.
During US president Barack Obama’s four-day visit to Kenya and Ethiopia last July, new measures were introduced, which included a further $1 billion commitment by OPIC to the US-led Power Africa initiative.
The Power Africa initiative, unveiled by President Obama in 2013, includes $43 billion in commitments, leveraged by the US government to increase efforts and efficiency of existing energy generation. The initiative aims to add 60 million connections by scaling up grid roll-out programs and intensifying its Beyond the Grid efforts.
According to Adnan Amin, the director-general of the International Renewable Energy Agency, there is a “huge appetite for investment in renewable energy projects in Africa”, however, African governments still need to ensure reduced risks by implementing regulatory frameworks and incentive schemes.
The World Bank’s International Finance Corporation (IFC) claims solar power has huge potential as an efficient energy source in Sub-Saharan Africa. Two-thirds of people, almost 600 million people and 70 percent of the population, live without access to electricity and there is not enough grid-based power generation to support the population.
The cost of solar power technology has fallen drastically according to the IFC “solar PV can now deliver power at less than 15 US cents per kilowatt hour (US¢/kWh) with long-term price certainty, compared to more than 25 US¢/kWh for diesel-fired power that is also subject to volatility with global oil markets”.
Since the start of Power Africa in June 2013, OPIC has committed more than $1.6 billion in financing and insurance to power projects in Sub-Saharan Africa.