The Africa Renewable Energy Fund (AREF) has secured a $20 million (Sh1.8 billion) commitment from the Commonwealth Development Corporation (CDC) as African sustainable energy projects gain traction.
The fund is seeking to raise $200 million (Sh18 billion) to invest in renewable energy production in sub-Saharan Africa and is managed by Berkeley Energy, a fund manager whose board includes former KenGen chief executive Eddie Njoroge.
AREF will invest in hydro, wind, solar and geothermal and biomass companies that have the potential to generate between 10 and 50 megawatts. The CDC said its cash commitment is meant to fill the funding gap in Africa’s energy sector which is seen as unattractive to many investors.
“This requires a major increase in power supply to the region and renewable energy has a vital role to play. Yet despite significant, untapped renewable energy resources, sub-Saharan Africa continues to trail the rest of the world in obtaining funds for renewable energy projects,” said CDC Africa regional director Dolika Banda.
The AREF team based in Nairobi has already identified potential investments.
“The fund is assessing a number of investment opportunities including a geothermal project in Ethiopia, hydro projects in Uganda and Sierra Leone and wind power businesses in West Africa,” said CDC in a statement.