The Energy Transition & Access Facility for Africa (ETAFA) is a new local currency subordinated debt vehicle that was launched by the Global Energy Alliance for People and Planet (GEAPP) and Nigerian investment firm Chapel Hill Denham (CHD).
A creative financing program called ETAFA makes it possible to use US$50 million to promote distributed renewable energy (DRE) projects in Nigeria. The Chapel Hill Denham Nigeria Infrastructure Debt Fund will commit an additional US$40M after receiving an initial contribution from GEAPP of US$10M. The financing provided by ETAFA is set up as a low-cost, long-term loan denominated in Nigerian Naira, which will significantly cut the cost of DRE solutions, especially for users with lower incomes.
The fastest and most economical way to expand access to clean electricity on the African continent is widely recognized as DRE. Although Nigeria is well-positioned to gain from DRE, the sector’s expansion is being constrained by a shortage of subordinated capital and local currency funding for developers. DRE developers run the risk of incurring losses as a result of currency mismatches between their revenues and borrowings since they are unable to get long-dated local currency financing. These obstacles will be removed by ETAFA, which will also aid in maximizing DRE’s potential across the nation.
“We welcome this support from GEAPP which will help Chapel Hill Denham with two of our strategic priorities,” said Bolaji Balogun, CEO of CHD. “Reducing the number of Nigerians without any access to electricity; and accelerating the adoption of renewable sources of energy. With partnerships with global institutions such as GEAPP, CHD seeks to mobilize up to US$1 billion for clean energy projects in Nigeria and Africa by 2030. It is also targeting to reduce the number of people without access to modern energy in Nigeria and Africa by half in the same timeframe.”
“Renewable energy development is paramount for Nigeria to transition to clean energy and meet critical climate goals, while powering economic and social development” says Stefanie Fairholme, GEAPP’s Head of Investments. “GEAPP’s partnership with CHD aims to tackle the barriers to Nigeria’s clean energy transition by providing the de-risking capital needed to stimulate the financing of projects that bring clean electricity to, and promote the economic development and sustainable livelihoods of, underserved communities.”
A larger impact aim of GEAPP is to enable 4 million new mini-grid connections, reaching 20 million people, and generating 50,000 jobs in Nigeria. This new cooperation is a component of that larger impact target.