African Development Bank's SEFA and partners sign $26.5M deal for Zambia’s Ilute solar project

The Sustainable Energy Fund for Africa (SEFA), managed by the African Development Bank, has committed to contribute $8 million toward a $26.5 million financing package to support the 32 MWp Ilute Solar Project in Zambia.

The project, an Independent Power Producer (IPP) located in Western Zambia, will supply electricity via the Southern African Power Pool (SAPP) under a market-based Power Purchase Agreement (PPA) with regional power trader GreenCo Power Services Ltd, an innovative regional power trader. This structure will avoid burdening the Zambian government's balance sheet and bypass the need to secure sovereign guarantees. It is expected to provide a model that can be replicated in other countries seeking to attract private capital and promote regional energy integration.

Representatives of the project’s financiers and developers signed the financing agreement on 19 June during the Africa Energy Forum currently taking place in Cape Town.   

Daniel Schroth, African Development Bank Group Director for Renewable Energy and Energy Efficiency, signed on behalf of SEFA. Representatives from Serengeti Energy, Kwama Energy, EDFI Management Company, and FMO also signed the financing agreement.

"SEFA is proud to be a key catalytic partner in the Ilute Solar Project, which exemplifies our commitment to supporting innovative solutions that accelerate Africa's energy transition," said Director Schroth. "This project's unique financing structure, coupled with its regional integration benefits, makes it a model for other African countries seeking to attract private investment and modernise their power sectors. SEFA's strategic investment is crucial in making this project a reality."

The Ilute Solar Project aligns with Zambia's strategic objective of leveraging the SAPP to mobilise private capital, reinforce energy security, and modernise its electricity system. It also aligns with the African Development Bank’s New Deal on Energy for Africa and the M300 initiative.

A Replicable Model for Africa's Energy Future

Additionally, under a biodiversity plan developed with the World Wide Fund for Nature (WWF), the project allocates 1% of annual revenues to a community trust governed by local representatives to fund locally prioritised development initiatives.

ABOUT SEFA

SEFA is a multi-donor Special Fund that provides catalytic finance to unlock private sector investments in renewable energy and energy efficiency. SEFA offers technical assistance and concessional finance instruments to remove market barriers, build a more robust pipeline of projects and improve the risk-return profile of individual investments. The Fund’s overarching goal is to contribute to universal access to affordable, reliable, sustainable, and modern energy services for all in Africa, in line with the New Deal on Energy for Africa and the M300.

Cover photo: By AFDB