December 11, 2024
Through the investment in the REPP2 fund, Norfund will help provide 7.7 million people with access to renewable energy. Recent figures from the IEA show that the number of people without electricity in Africa is now declining again, after two years of growth.
“This kind of investments is absolutely crucial for the world to combat both poverty and climate change,” says Minister of International Development Anne Beathe Tvinnereim.
The fund, called REPP2, amounts to a total of NOK 1.2 billion (USD 107 million). Norfund is investing NOK 166 million (USD 15 million) in the fund, which also includes contributions from the Green Climate Fund and FMO, the Dutch development finance institution. Norad is providing funding for technical assistance.
“The fund aims to develop 330 MW of new capacity, which will provide clean energy access to more than 7.7 million people,” says Tellef Thorleifsson, CEO of Norfund.
The fund is structured as a blended finance model, involving both public and commercial investors. It will invest in small-scale renewable energy projects in sub-Saharan Africa, including both grid-connected and off-grid solutions. The fund builds on a previous fund, REPP1, which amounted to USD 120 million and has made 57 investments since 2015.
Small-scale solutions are starting to make a significant impact in Africa
Since 2000, the number of people without access to electricity has decreased by 925 million, and 40 new countries have achieved near-universal access. In Africa, however, access has not kept pace with population growth, and from 2019 to 2022, the number of people without electricity on the continent increased. Africa now accounts for the majority of the approximately 750 million people worldwide who still lack access to electricity.
“It’s great to see that solar home systems, based on mobile payment plans, have become affordable enough to start making a significant impact on progress in Africa as well,” says Tvinnereim.
The IEA estimates that such solutions provided electricity access to over 43 million people in sub-Saharan Africa in 2023, representing 4 percent of the population. Altogether, they accounted for one-third of all new electricity connections on the continent in 2023, which totaled more than 6.5 million.
Affordable capital enables scaling up
The reduced cost of solar panels, batteries, and energy-efficient solutions makes it possible to offer electricity through rooftop solar systems at a repayment rate close to what many pay for kerosene. However, this model requires significant capital.
“Norfund has made several direct investments in such companies, and we have contributed to developing new financing methods that lower interest costs, making the systems affordable for more people,” says Thorleifsson.
One example is Sun King, which allows its customers to split payments via mobile or cash for as little as $0.15 per day. Approximately half of the customers are women.
In 2023, 420,000 new households gained access to electricity through the off-grid and mini-grid companies in which Norfund has invested (see Norfund’s annual report).
Thorleifsson points out that smaller power plants supplying electricity to the grid or local mini-grids are also necessary, but accessing capital for this type of investment is often challenging.
“We believe that this new fund can play an important role in enabling and unlocking financing for such projects as well,” says Thorleifsson.
Population without energy access, 2010–2024
