AREF is a dedicated renewable energy fund focused on Sub-Saharan Africa aiming to support small to medium scale independent power producers (IPPs). It will be headquartered in Nairobi and is targeting a final close of US $200 million within the next 12 months to be invested in grid-connected development stage renewable energy projects including small hydro, wind, geothermal, solar, biomass and waste gas.
The fund was initially promoted in a joint initiative by the African Biofuel and Renewable Energy Company (ABREC) and the African Development Bank (AfDB). It will target IPPs with an ideal size of between 5 and 50 MW and a commitment per project of between US $10 million and US $30 million, with the capacity to source further funding from co-investors where necessary for a larger investment. The fund will be managed by Berkeley Energy Africa Limited (Berkeley Energy), a fund manager focused on developing and investing in renewable energy projects in emerging markets.
AREF’s lead sponsor is the African Development Bank which is bringing US $65 million in an equity investment package from its statutory resources as well as climate finance instruments such as Sustainable Energy for Africa (SEFA) and the Global Environment Facility (GEF) in order to leverage commercial and institutional investment. SEFA will additionally fund a Project Support Facility (PSF), which will provide resources to be deployed at an early stage to structure bankable deals.
“Over the past decade, the AfDB has established itself as a prime catalyst for renewable energy investment on the continent and is currently hosting the Africa Hub for the Sustainable Energy for All (SE4All) initiative” said Gabriel Negatu, AfDB Regional Director for the East Africa Regional Resource Center. “As Africa’s largest infrastructure finance partner, we understand the value of supporting both large-scale and small-scale projects as part of our strategy for Africa to promote inclusive and sustainable growth.”
The investor group also includes West African Development Bank (BOAD), Ecowas Bank for Investment and Development (EBID), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), Calvert Foundation, Berkeley Energy and ABREC, who are the vision-bearers of the fund.
AfDB selected Berkeley Energy as the fund manager of AREF following a competitive procedure. Berkeley Energy, based in Mauritius, will have operational headquarters in Nairobi and a further office to be situated in West Africa.