The Facility for Energy Inclusion
The Facility for Energy Inclusion (FEI) is a debt financing facility for small-scale energy access projects - off-grid solar, small Independent Power Producers (IPPs), captive installations and mini-grids. FEI is sponsored by The African Development Bank and managed by Lion’s Head Global Partners (LHGP), an investment bank founded in 2008, which provides investment management and financial advisory services in sub-Saharan Africa and other emerging markets.
FEI addresses one of the major barriers for small-scale sustainable energy projects in Africa – the limited access to debt financing. FEI intends to target segments of the sector that remains underserved by both international investors and domestic lenders.
FEI consists of 2 windows:
FEI On-Grid provides long-term debt financing in hard and local currencies to small-scale IPPs, mini-grids and captive power projects using renewable energy technology with a capacity below 25MW. FEI On-Grid also offers project preparation support by funding advisory services (e.g. environmental & social studies, legal studies, market studies, financial analysis, tax matters and other technical aspects) required for projects to reach financial close,
The range of borrowers that can be financed by FEI On-Grid includes:
- Small scale (<25MW) renewable energy projects in Africa
- Entities including:
- Independent Power Projects (IPPs)
- Captive, Commercial & Industrial projects
- Mini-Grids and equivalent
Anticipated development impact includes:
- 750MW of additional capacity
- 9.6 million tonnes of CO2 equivalent avoided
- 30 million beneficiaries
- 18,000 jobs created
FEI Off-Grid Energy Access Fund (FEI-OGEF):
Off-grid energy access companies often struggle to raise financing from local banks and therefore have to turn to foreign currency loans. This generate significant foreign exchange risks and transaction costs. FEI-OGEF addresses this problem by offering flexible short-term debt financing in the ranges of €1.6 – 8.4 million to off-grid companies, mainly in local currencies but also in hard currencies where appropriate. A key objective of FEI-OGEF is to effectively engage with the local market by crowding in local investors, so as to provide access to long term, local currency funding. FEI-OGEF also offers technical assistance for market development and deal structuring.
The range of borrowers that can be financed by FEI-OGEF includes:
- SHS providers and operators
- Mini-grid developers and operators
- Distributed energy equipment manufacturers and equivalent
- Microfinance institutions (MFIs) offering energy credit products
- Other companies operating in the sector with a clear link to energy access
As of early 2020, FEI-OGEF has successfully invested €17 million in 3 companies in sub-Saharan Africa – BBOXX Rwanda, SunCulture and d.Light.
The anticipated development impact for the investment strategy over the fund life includes:
- 2.4 mm beneficiaries across sub-Saharan Africa
- 27,900 MWh of total new renewable energy consumption
- Creation of 6,000 jobs through its portfolio companies
- Co-investments worth more than €168.6 million in its portfolio companies
- 1.25 million tonnes of C02e of GHG savings