Projects to help boost private investment in renewable energy, energy efficiency and sustainable forests in six African countries have received $330 million in funding from the African Development Bank and the Climate Investment Funds, the AfDB announced Thursday.
Ghana, Burkina Faso, the Democratic Republic of Congo, Kenya, Mali, and Mozambique won the money for various projects proposed to incentivize investment in various climate action techniques. Private investment in renewable energy in developing countries is generally risky, the bank said: There are high upfront capital costs, a lack of suitable insurance products, and meager returns on investment compared to fossil fuels.
But thanks to a global competition run by Climate Investment Funds, or CIF, African countries have been able to propose climate-improving projects that they believe should be funded. Those projects are then financed through either public-private partnerships or the private-sector arms of the various multilateral development banks, such as AfDB. Through those partnerships, private companies are offered things like loans, guarantees, or equity in order to accommodate the increased financial risk of investment.
The selected concepts — 15 now in total — will go forward for further development.
Mali in particular is looking to reduce its dependence on imported fossil fuel and reduce the degradation of its forests. A landlocked country in the Sahelian belt of West Africa, Mali currently meets all of its fossil fuel needs through imports, making it vulnerable to price volatility.
Now, Mali will receive $40 million in funding for three projects. The first hopes to create a solar photovoltaic grid as an alternative to the country’s fossil-fueled thermal power stations. Financing will be used to lower tariffs through buy-downs, the CIF said, and encourage the development of independent power producers.
The second project will focus on providing subsidies to private investors in photovoltaic solar and biofuels, in order to drive down up-front costs.
The third project supports the construction and operation of mini and micro hydro power plants.
“At AfDB, we believe that private sector engagement in climate action is critically important to stimulate markets, increase investment potential, develop climate-friendly business models, and ensure a sustainable shift for effective climate solutions,” Mafalda Duarte, an AfDB coordinator, said in a statement.
A list of the rest of the projects being funded by AfDB and CIF can be found here.