With Nigeria now a full member of African Trade Insurance Agency (ATI), having signed the protocol, access to renewable energy being accessed by other African countries could become possible.
This is if the government that should drive the process, rises up to the needs of the citizens, whose power supply has been abysmal and major challenge for businesses in Africa’s most populous nation, Nigeria.
Malawi has just accessed a $67 million Nkhotakota Solar Power Plant, backed by an international consortium that is expected to set a regional standard and considerably reduce the country’s energy deficit.
This is the 2nd renewable energy project supported by ATI’S Regional Liquidity Support Facility (RLSF), designed to cover the late-payment risks of publicly owned power utilities.
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The facility can be accessed by IPPS located in countries that sign onto the RLSF Memorandum of Understanding (MOU). To date, seven countries have signed on – Benin, Burundi, Côte d’Ivoire, Madagascar, Malawi, Uganda and Zambia, with several others in the pipeline including Ethiopia and Ghana.
Covid-19 has highlighted the extent of the critical energy gap in Africa, where diversification is needed to ensure more stable and broader energy access. The pandemic has shown the urgency to ramp up energy access and diversify the existing energy mix in many African countries.
In sub-Saharan Africa, electricity access stands at just 43 percent, or roughly half the global access rate. While challenges remain, Covid-19 is also revealing the importance of increasing more affordable renewables within the energy mix.
The Nkhotakota Solar Power Plant, one of Malawi’s first commercial scale-independent solar power projects, is expected to add a significant 37 Mwac of clean energy to the national capacity, currently estimated at 362 Mwac. The solar plant, which is being developed in two phases of 21 Mwac and 16 Mwac, is the second renewable energy project to be backed by the African Trade Insurance Agency’s (ATI) Regional Liquidity Support Facility (RLSF). ATI, through the RLSF, is providing liquidity cover for a tenor of up to 10 years. The completed project will supply electricity for up to 150,000 Malawian households.
The first project to benefit from RLSF was a partnership with Gigawatt Global on Burundi’s first private grid-connected solar plant, which was the country’s first permanent power station in 30 years. RLSF encourages investments in renewable energy in ATI member countries through a unique and innovative guarantee product that protects Independent Power Producers (IPPS) against the risk of late payment by national power companies.
In 2017, ATI and the German Development Bank, KFW, with financing from the German Federal Ministry for Economic Cooperation and Development (BMZ), launched the RLSF. The Facility was created to help tackle climate change and attract investments by supporting renewable energy projects in ATI’S member countries. RLSF has an initial capacity of EUR 63.2 million and it supports small and mid-scale renewable energy projects with an installed capacity of up to 50 MW (and in exceptional cases up to 100 MW) by protecting the developers against the risk of delayed payments by public off-takers to ensure more projects reach financial close.
ATI is actively encouraging other countries to sign on as a way of providing more cost-effective and clean energy solutions.
