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AfDB, Clean Technology Fund lend $10mn to kick-start Ethiopian geothermal IPP
ETHIOPIA
THE Clean Technology Fund (CTF) is to lend $10mn to Ethiopia’s first geothermal independ- ent power producer (IPP) in a bid to help diver- sify the country’s energy mix.
The CTF’s Trust Fund Committee has approved the concessional senior loan, which will partially fund the 50MW Tulu Moyo geo- thermal power plant.
The project is seen as a critical step for Ethi- opia to develop sustainable energy, and is the country’s first geothermal IPP project.
The deal means that private finance is sup- porting the country’s geothermal development plans.
The investment is being managed by the Afri- can Development Bank (AfDB).
“We welcome the participation of CTF in this project. These concessional resources will be instrumental in helping the country to diversify its energy mix by facilitating the deployment of renewable energy technologies while support- ing Ethiopia in meeting the targets under its National Electrification Plan 2.0,” said Anthony Nyong, director of climate change and green growth at the AfDB.
The project involves the design, construction, commissioning and operation of a 50MW geo- thermal power plant under a build, own, operate and transfer (BOOT) scheme.
The project forms part of the Ethiopian gov- ernment’s plans to build 150 MW of geothermal capacity by 2024. It will include a sub-station and an 11-km transmission line.
Antony Karembu, principal investment officer and renewable energy specialist at the AfDB, noted that as the first geothermal IPP in Ethiopia, CTF will leverage climate finance
options in mobilising private sector operators for the project.
The project is expected to curb greenhouse gas (GHG) emissions by “over 10 million tonnes of CO2 equivalent over its lifetime, and will cre- ate around 600 jobs,” Karembu said.
CTF will catalyse the deployment of renew- able energy technologies in Ethiopia and will underpin future investments into the sector.
CTF is a multilateral lender, and is provid- ing soft finance in a bid to make the Ethiopian geothermal market more attractive for private investors.
The deal means that first-mover risks are reduced and compliance requirements are bet- ter understood by all market participants, said Leandro Azevedo, principal climate finance officer and CIF co-ordinator at the AfDB.
The CTF funds will be drawn from the Dedi- cated Private Sector Program III designed to pro- vide risk-appropriate financing for high-impact, large-scale private sector projects that use clean technologies.
The CTF is one of the two funds managed by Climate Investment Funds (CIF), which since 2008 has been managing $8.3bn of investment in low-carbon and climate-resilient projects across the developing world.
The AfDB has been a major partner of CIF in mobilising private investment. The AfDB said it has so far has managed a cumulative total of $866mn of investment from CIF, and $1.905bn from its own funds across 26 projects in Africa.
These has leveraged a further estimated $10.7bn in co-financing from public and private sources.™
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