The Africa Renewable Energy Fund II (AREF II) has achieved its first close at €130 million, following a joint investment of €17.5 million from the Sustainable Energy Fund for Africa (SEFA) and the Climate Technology Fund (CTF) through the African Development Bank (AfDB).
AREF II, a successor to the original Fund being managed by Berkeley Energy, is a 10-year closed-ended renewable energy Private Equity Fund with a $300 million target capitalization. It invests in early-stage renewable energy projects, thereby not only de-risking the most uncertain phase of power projects, but also promoting increased green baseload in Africa’s generation mix.
According to a news report by the Africa Press Organization (APO) Group, by their investments in the Fund, the SEFA and the CTF will each contribute roughly €8.7 million to mobilize private-sector investment into Africa’s renewable energy sector. The Sustainable Energy Fund for Africa will also contribute financing to the AREF II Project Support Facility, which funds technical assistance and early-stage project support to improve bankability.
Other investors include the U.K’s CDC Group, Italy’s CDP, the Netherlands Development Finance Company (FMO) and SwedFund.
Commenting on the AfDB’s landmark achievement on the AREF II so far, AfDB’s Vice President for Power, Energy, Climate and Green Growth, Dr. Kevin Kariuki , said: “We are proud to be associated with Berkeley Energy and other like-minded investors, and look forward to AREF’s continued success and leadership in promoting sustainable power development on the continent.”
Similarly, Berkeley Energy’s Managing Director, Luka Buljan, enthused: “We are very excited to have reached this milestone with strong support from our backers. The catalytic tranche from the Sustainable Energy Fund for Africa and the Climate Technology Fund will assist in mobilising private institutional investors up to full fund size of €300 million. We now look forward to concluding the fundraising and delivering projects that will provide clean, reliable and affordable energy across African markets.”
The Manager for Renewable Energy Initiatives at the African Development Bank and Coordinator of the Sustainable Energy Fund for Africa, Joao Duarte Cunha, further clarified: “AREF is intertwined with the Sustainable Energy Fund for Africa’s history and success, and we have worked closely over the last decade to create precedents in difficult markets and challenging technologies. We look forward to continued collaboration to accelerate the energy transition in Africa.”
It would be recalled that in 2012, the AfDB selected Berkeley Energy, a seasoned fund manager of clean energy projects in global emerging markets to set up AREF.
AREF II has a sharper strategic focus than its predecessor on “green baseload” projects that will deliver firm and dispatch-able power to African power systems through hydro, solar, wind and battery storage technologies.
