Press Release

Convergence awards design grant to Africa GreenCo, an intermediary off-taker and aggregator of renewable energy projects in sub-Saharan Africa

Convergence Design Funding awards aim to support the design of catalytic blended finance vehicles that attract private capital to global development at scale

TORONTO, ON, CA – Convergence announced it will award a design grant to Africa GreenCo, an intermediary off-taker and aggregator of renewable energy projects across sub-Saharan Africa. Africa GreenCo will focus initially on the countries within the Southern African Development Community (SADC) who are members of the Southern African Power Pool (SAPP), to help attract private sector investment into renewable energy generation projects in the region. Once the concept has been proven within SADC, it can be rolled out to other power pools. The design grant is part of Convergence’s efforts to support catalytic blended finance vehicles and foster market-wide learning to drive the field forward. Convergence will award a minimum of CAD 10M in design grants over the next five years, and this initial funding is provided by the Government of Canada.

Africa GreenCo will purchase power from multiple independent power projects (IPPs) across the SADC region through power purchase agreements, and sell that power to a diversified portfolio of purchasers through power supply agreements. Africa GreenCo will mitigate the risk of purchaser default through an ability to secure alternative buyers on a bilateral basis or through short-term trading on the SAPP electricity markets. Through its participation in competitive power markets, Africa GreenCo will promote cross-border power transactions and a more dynamic and liquid short-term power market. Africa GreenCo will increase the bankability of IPPs by acting as a creditworthy off-taker and will also address inefficiencies caused by the “single buyer, single seller” model by operating on a portfolio basis.

Africa GreenCo has received funding from The Rockefeller Foundation and, amongst others, support from the Regional Electricity Regulators Association of Southern Africa (RERA), the SAPP, the Association of Power Utilities of Africa (APUA) and Sustainable Energy for All. Convergence’s proof of concept funding will complement funding from The Rockefeller Foundation, and will enable Africa GreenCo to complete all business plan, financial modelling and investment memorandum work required to establish the Africa GreenCo operating entity. The entity is envisioned to be African-led, and its initial capital structure is anticipated to include contributions from African governments alongside capital from development finance institutions and donors.

“Africa GreenCo represents a new and innovative approach to tackling the issue of creditworthiness of off-takers. In contrast to other initiatives which largely focus on financial instruments, like guarantees, that compensate for lack of off-taker creditworthiness but do not address underlying structural and market weaknesses, Africa GreenCo will mitigate the underlying credit risks associated with long term investments, leading to a reduction in the cost of capital, an increase in installed renewable capacity, and lower energy tariffs in the region,” said Ana Hajduka, CEO of Africa GreenCo.

Africa GreenCo aligns closely to the principles of the African Union’s New Partnership for Africa’s Development (NEPAD) Agency. Dr. Ibrahim Assane Mayaki, Chief Executive Officer of NEPAD commented, “NEPAD supports Africa GreenCo’s efforts to scale up access to Africa’s abundant renewable power sources at a regional level.  Africa GreenCo complements the various initiatives that are associated with NEPAD’s program of work to harmonise regional and national policies on infrastructure, market development and trade, specifically NEPAD’s newly launched Renewable Energy Access Project (REAP) which aims to accelerate the development and implementation of renewable energy projects across Africa.”

Convergence is an independent institution that connects, educates, and supports investors to execute blended finance transactions that increase private sector investment in emerging markets. Convergence offers feasibility study and proof of concept grant funding for practitioners to design catalytic blended finance vehicles that aim to attract private capital to global development at scale. To share what grantees have learned through their design process, Convergence, in partnership with the Bertha Centre for Social Innovation and Entrepreneurship at the University of Cape Town's Graduate School of Business, will create learning briefs that outline key decisions and outcomes from the design processes to ensure practitioners considering similar vehicles have access to design best practices.

Africa GreenCo represents a simple yet fundamental paradigm shift that will catalyze private investments in renewable projects, while simultaneously reducing the fiscal burden borne by African Governments. Introducing market intermediaries of this type can materially reduce risk, inefficiencies, project development times, and costs borne by all stakeholders and help deliver electricity to millions,” said Joan Larrea, CEO of Convergence.

Convergence accepts Design Funding applications on a continuous basis, and reviews applications every quarter. To be considered for the next review cycle, practitioners must submit their applications by May 31, 2017. Visit www.convergence.finance/design-funding to learn more.

MEDIA CONTACT: For media inquiries, please contact comms@convergence.finance.

ABOUT CONVERGENCE: Convergence is an institution that connects, educates, and supports investors to execute blended finance transactions that increase private sector investment in emerging markets. Visit www.convergence.finance to learn more.

ABOUT AFRICA GREENCO: Africa GreenCo in its current form is a UK not-for-profit company limited by guarantee which has been established with the sole purpose of developing the GreenCo concept to its implementation stage. This UK entity is separate to the operational Africa GreenCo entity referred to above, which will be a for profit African based entity.

More News