ElectriFi - The Electrification Financing Initiative
EDFI ElectriFI is an EU-funded investment facility, financing private companies and projects at an early stage. It focuses on new or improved electricity connections and on generation capacity from sustainable energy sources in emerging markets.
ElectriFI, is managed by the EDFI Management Company, a company established by the 15 European Development Finance Institutions (DFIs).
Ensuring a global transition towards renewable energy
Providing access to electricity in the poorest countries is a global challenge. More than 700 million people in sub-Saharan Africa, mostly in rural areas, are projected to remain without electricity in 2040. Achieving the Sustainable Development Goals (SDG7 and SDG13 in particular) will require investments of more than US$ 2 trillion a year in new and sustainable energy supply. The EU has been pioneering efforts to support private sector led climate finance to address these challenges.
Launched in 2015 during the COP21, ElectriFI, the Electrification Financing Initiative, is one of the EU’s key innovative financial instruments.
Accelerating clean energy access in developing countries
ElectriFI aims to accelerate the development of businesses providing access to clean energy to hundreds of millions of people by 2030. ElectriFI’s unique business model relies on EU funding so that it can invest in local markets in less developed economies and fragile situations. By combining technical assistance and risk capital, ElectriFI can take greater risks than other investors. ElectriFI’s activities de-risk investments and allow private investors and development finance institutions to deploy capital that they would not have invested otherwise.
Total size of the facility is €215 million earmarked as follows:
- Global window: A budget of €121 million made available for all emerging markets, including additional support from Power Africa (US$ 10 million targeted at Sub-Saharan Africa) and Sweden (€5 million).
- Country windows: developed in partnership with EU Delegations and partner country governments, ElectriFI Country Windows offer customised approaches to meet the needs of specific markets and drive policy dialogue. Currently ElectriFI operates in Benin (€5 million), Côte d’Ivoire (€10 million), Nigeria (€30 million), Zambia (€40 million) and Pacific region (€8 million) and is expected to expand.
An impact-first and catalytic blending instrument
Typical business models financed by ElectriFI include minigrids, solar home systems, independent power projects (IPP) and captive power production.
ElectriFI clients have to comply with pre-defined impact targets, high standards of business integrity, and are expected to reach profitability within 3 years following ElectriFI investment.
ElectriFI makes investments additional to those from other investors. These investments rely on a strategic and entrepreneurial approach to attracting additional financing for promising early-stage businesses. They comply with EU development finance objectives by reducing their exposure to risk and allowing them to grow and access traditional finance.
All investments are assessed through strict additionality criteria and leverage ratios.
Results so far
So far, EDFI ElectriFI has:
- Offered flexible products supporting the specific needs of 25 companies
- Invested €53 million which leveraged an extra €120 million to finance those companies
- Built and accelerated renewable energy markets through partnerships: a third of ElectriFI’s portfolio is co-invested with other Development Finance Institutions
- Contributed to the Sustainable Development Goals and the Paris Climate Agreements with an estimated:
- 1800 ktonnes of C02 avoided
- 13 million beneficiaries across 22 countries
- 1 800 GWh renewable energy produced per year
- Successfully supported developing countries strategies for clean energy access: 68% projects are located in sub-Saharan Africa and half of the portfolio is invested in low income countries.