- The solar green bond is the first investment under the IFC and GEAPP partnership to invest in DRE solutions in Sub-Saharan Africa.
- The bond aims to finance over 220MW of on-site solar energy and energy storage projects and reduce carbon emissions by about 4m tons.
The World Bank’s International Finance Corporation (IFC), in partnership with Social Investment Managers and Advisors LLC (SIMA Funds or SIMA) and other financiers, have reached the first close of a $150 million solar green bond. IFC disclosed this in a press release on Wednesday. The firm stated that this bond will finance productive-use solar projects throughout Africa. It will also finance one of the most significant impact-driven funds exclusively focused on furthering the rooftop solar sector in Africa, with an emphasis on small and medium-sized enterprises, which are harder to reach. The solar green bond will offer short-term corporate and project financing of up to 10 years to support the growth of small and medium-sized local developers for individual projects less than 5 megawatts (MW).
According to IFC, this funding focuses on manufacturing, services, education, healthcare, and agri-processing. This is the first investment under the IFC and Global Energy Alliance for People and Planet (GEAPP) partnership to make strategic investments in distributed renewable energy (DRE) solutions, principally in Sub-Saharan Africa. IFC’s $45 million financing package for the solar green bond includes a $25 million IFC own-account loan and subordinated loans of $11 million from the Finland-IFC Blended Finance for Climate Program and $9 million from GEAPP.
The press release further disclosed that additional lenders for the $131 million first close include the Shell Foundation, the US Development Finance Corporation, the Schmidt Family Foundation, FMO, the Dutch Entrepreneurial Development Bank, the German Development Finance Institution (DEG), the Belgian Investment Company for Developing Countries (BIO), and the Development Bank of Austria (OeEB). SIMA expects a second close led by private sector investors for an additional $25 to $30 million by April 2024. Increasing access to clean, reliable, and affordable energy in Africa is key for achieving the Sustainable Development Goals and enhancing climate resilience.
Furthermore, the bond aims to finance over 220 MW of on-site solar energy and energy storage projects that will provide energy savings, enhance value chains, and reduce fossil fuel consumption and carbon emissions by an estimated 4 million tons over the life of the assets. Commenting on the partnership, the Regional Vice President for Africa, IFC, Sérgio Pimenta, said, “Although demand for solar solutions is growing rapidly, access to affordable financing is a major bottleneck for Africa’s smaller businesses. Solar projects still have higher capital costs than alternative polluting technologies, leading to continued heavy reliance on fossil-fuel backup generators. We’re pleased to participate in this innovative partnership to help advance sustainable energy solutions.”