The Sustainable Energy Fund for Africa (SEFA) is a multi-donor trust fund administered by the African Development Bank – anchored in a commitment of USD 60 million by the Governments of Denmark and the United States – to support small- and medium-scale Renewable Energy (RE) and Energy Efficiency (EE) projects in Africa. In many African countries, smaller clean/renewable energy projects are potentially viable from a commercial perspective, but the initial development costs often prevent these projects from accessing necessary financing. SEFA is founded on the premise that reliable, clean and affordable energy can contribute to strong African economies and can have a positive impact in creating employment opportunities across the continent.
“Unlocking Africa’s clean energy potential for employment and economic growth”
The development objective of SEFA is to support sustainable private-sector led economic growth in African countries through the efficient utilization of presently untapped clean energy resources. SEFA has been designed to operate under three financing windows: project preparation, equity investments and enabling environment support.
Project Preparation:
This window provides cost-sharing grants and technical assistance to private project developers/promoters to facilitate pre-investment activities for renewable energy and energy efficiency projects. Grant funding will target development activities from feasibility up to financial closure for projects with total capital investments in the range of USD 30 million – 200 million.
SEFA is structured to respond to requests originated or championed by AfDB staff. All proposals received will be screened and pre-assessed against the basic eligibility criteria by the SEFA Secretariat, currently hosted in the Energy, Environment and Climate Change Department (ONEC) of AfDB. In the case of external requests meeting the basic eligibility criteria and presenting a good pipeline opportunity, SEFA Secretariat will work with other departments with the view of identifying a champion to lead the internal review and approval of a proposal.
Equity Investments:
This financing window seeks to address the lack of access to early stage capital for small-and medium-sized projects, as well as the low managerial and technical capability of smaller entrepreneurs and developers.
The SEFA equity capital combined with a dedicated technical assistance envelope will be deployed by the SEFA co-sponsored Africa Renewable Energy Fund (AREF), a pan-African Private Equity Fund (PEF) solely focused on small/medium (5-50 MW) independent power projects from solar, wind, biomass, hydro as well as some geothermal and stranded gas technologies. Investment decisions are the sole responsibility of AREF’s Fund Manager – Berkeley Energy LLC – subject to the terms of the AREF fund agreements, with the SEFA Secretariat’s role mainly as providing general oversight to fund implementation as well as collaboration on project identification.
Enabling Environment:
This window provides grants to support mainly public sector activities that create and improve the enabling environment for private sector investments in the sustainable energy space in Africa. This includes advisory and implementation of legal, regulatory and policy regimes that provide clear and predictable rules for project development, implementation and operation, capacity-building activities to allow the public sector to act as a reliable and creditworthy counterparty in energy projects and programs. This component is not bound by project size limits, and includes interventions spanning the off-grid, mini-grid, and grid-connected segments.
SEFA is also aligned with the Sustainable Energy for All Initiative (SE4ALL) to support preparatory, sector planning and capacity-building activities arising out the AfDB-hosted SE4All Africa Hub. This includes support to High-Impact Opportunities (HIO) for Green Mini-Grids, as an area of strong complementarity with the Bank’s business in the grid-connected space.
