Dutch development bank FMO finances construction of four solar plants in Burkina Faso
20-11-2021 07:32:30 | by: Bob Koigi | hits: 2024 | Tags:

Dutch development bank FMO has announced that the financing and contracting for the construction and operation of four solar plants in Burkina Faso has been finalized.

The solar plants will be located near the cities of Nagréongo (near Ouagadougou), Kodeni (near Bobo-Dioulasso), Tenkodogo and Dédougou and together will be able to generate 110 MWp. Three of the four projects have been signed, while the signing of the fourth project is underway.

FMO’s financing will consist of four loans, between EUR 14 mln and EUR 34 mln per plant, with a total amount of EUR 90 mln. The first 3 of the projects were partially financed through the Access to Energy Fund, a joint initiative of the Dutch government and FMO; the fourth project was partially financed by the Building Prospects Fund, the Dutch government fund for private investments in the agribusiness value chain, infrastructure and climate in developing countries.

In addition, co-financiers include The Interact Climate Change Facility (ICCF) with EUR 21 mln, (syndication between Agence Française de Dévelopment-AFD, BIO, DEG, Finnfund, ,Norfund, OeEB, Proparco, SIFEM and Swedfund) and Proparco with EUR 15 mln. The financing round illustrates the recent Team Europe approach, allowing European member states to better work together to offer collective support to partner countries.

The solar plants are financed under Public-Private Partnership between the government of Burkina Faso and the developers of these projects which are Africa REN, GreenYellow and Qair, through MIHIA Holding (Make It Happen In Africa), a 51%/49% investment vehicle between Qair and Stoa.

Burkina Faso is one of the poorest countries in the world, ranked 182 out of 189 in the Human Development Index Report 2020. Only 1 in 5 people in Burkina Faso have access to electricity, being 60 percent of the urban population and only 3 percent of the rural population. Until now, 85 percent of the country’s grid is powered by diesel generators, with the fuel imported by road or through electricity imports from neighboring Ghana and Ivory Coast. Such reliance on fossil fuels and electricity imports results in high electricity costs for the country.

The government has high ambitions to substantially increase the electrification and supports the development of endogenous sources of electricity, including solar. The total generation capacity on the grid was 344 MW in 2020, of which 60MW renewable energy generation. The additional solar power plants, once operational, will increase the generation capacity in Burkina Faso to 456 MW of which 172MW renewable energy generation. SONABEL is responsible for the bulk of generation and all the transmission and distribution in the Burkina Faso power sector, and will also be the off-taker for the electricity generated by the four solar plants.

“FMO supports the construction of these four solar plants to increase the electrification in Burkina Faso in a sustainable way, lessening the reliance on fossil fuels. At the same time, creating more access to electricity helps reduce inequalities, allowing, for example, studying at night and longer business hours. These projects rely on many parties being committed to the same impact goal, and we are thankful for their partnerships,’’ said Huib-Jan de Ruijter, Chief Investment Officer of FMO.

“Building much-needed renewable energy projects in Africa requires multiple finance partners working together. With ICCF we have a very efficient channel to achieve this, enabling European development finance institutions to join forces and foster a joint answer to the urgent climate change challenge”, adds Peter Thimme, Chair of ICCF.

"Proparco has long been committed to being a core partner of the energy transition in Africa, having financed many landmark renewable energy projects on the continent. To further increase its impact in a context of growing urgency, Proparco is happy to join forces with FMO and other committed stakeholders to improve access to clean, renewable energy in Burkina Faso,’’ added Ariane Ducreux, Head of Proparco’s Energy and Infrastructure Division.