Annual Report 2015

PIDG FACILITIES

 

Green Africa Power (GAP)

Providing intermediate capital/mezzanine financing for renewable energy power generation projects in sub-Saharan Africa

Achievements in 2015

PIDG’s newest Facility GAP became operational in late 2014. During 2015 GAP considered a number of possible large-scale investments which were reasonably well-advanced but could not reach financial close without PIDG's involvement.

 

Other notable highlights

During 2015 GAP substantially progressed a geothermal project in East Africa although this deal has not yet reached financial close. Geothermal power is a relatively new sector where the level of proven resource needs to be comparatively high before projects will attract private sector investment. GAP has been working to establish the required regulatory frameworks to progress exploratory drilling which, to date, has successfully attracted a robust selection of senior debt.

 

2016 and Beyond

Intermediate capital/mezzanine finance falls between equity and senior debt; GAP has found its investments to be chiefly required at the equity end of this spectrum, which comes earlier in a project financing. It intends to continue to pursue renewable energy power projects which require intermediate capital and specific construction-phase finance to progress.

Progressing large-scale on-grid renewable energy solutions in sub-Saharan Africa presents complex challenges which can result in delays to project pipelines. In particular, unstable national grids often require strengthening to accept new power generation, particularly fluctuating solar and wind power. GAP has the capacity to incorporate improved grid infrastructure as part of its larger scale projects and will pursue this area.

Alongside large-scale on-grid initiatives, GAP is interested in pursuing opportunities for smaller scale renewables, predominantly solar power generation, for light industry, farming facilities and small-scale mining.

Solar power generation is increasingly attracting private sector investment and GAP's work will therefore focus on the additionality which can be brought to solar projects in PIDG’s more challenging markets in sub-Saharan Africa.

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