ARE Scale-up: Deploying Renewable Energy in Africa

ARE Scale-up works to develop energy supply in Africa that is secure, sustainable, and accessible. It seeks greater involvement by the private sector in this process of change, and rounds out large-scale international initiatives such as the Africa Renewable Energy Initiative (AREI) and Sustainable Energy for All (SE4All). 

ARE Scale-up has two objectives: 

• Increase access to energy for people far from electricity grids
• Deploy renewable energies connected to the grids.

Through ARE Scale-up, AFD along with the European Commission are helping to broaden access to energy for Africans and are mobilizing private players to meet African energy challenges.
 
 

• Technical assistance

ARE Scale-up has a fund dedicated to technical assistance. This fund is managed by AFD and helps create the conditions required for the development of renewable energy in Africa.
Its goal is to strengthen the regulatory and institutional environment in African countries. The fund also lays the groundwork for financing public and private renewable energy projects: these may involve producing grid-connected renewable energies or developing access through mini-grids.
 

• A guarantee fund

ARE Scale-up also includes a guarantee fund, managed by Proparco, AFD Group’s subsidiary in charge of the private sector. This fund supports investments in companies specialized in developing off-grid electrification through mini-grids and small-scale decentralized energy production.
 

AFD’s actions mostly involve direct support for project preparation for

• projects to develop renewable energy production;
• extension and strengthening of electricity grids to better integrate renewable energies; and
• access to electricity in rural areas via mini-grids.

This support takes the form of pre-feasibility or feasibility studies for projects to be brought to completion. The studies may be technical and financial or environmental and social in nature. Each project goes through a process of public policy dialog with energy ministries, electricity companies, and medium to large rural electrification agencies.

Loans issued within this framework range from €20 to €100 million, depending on the project and country.

AFD also finances strategic support and studies when needed to develop a set of coherent projects to promote a country’s low-carbon and resilient development trajectory. This support may include potential studies, development or revision of sectoral strategic frameworks or master plans, sectoral studies, or capacity building.

Since 2017, AFD-managed technical assistance has led to 49 studies and technical assistance activities for a total cost of €13 million. To date, 37 studies have been finalized and 12 are currently underway. These act as groundwork in more than 20 African countries, promoting investment in renewable energy and aiding in the adaptation of regulatory frameworks when needed.

The completed studies and technical assistance actions have helped mobilize more than €1 billion in financing for renewable energy projects, representing a potential of around 476 MW of installed renewable energy, including 11 MW in mini-grids. This should help provide approximately 500,000 new households with access to a sustainable energy source.

Focus on three projects that have received loans and capitalized on ARE Scale-up support:

• Tanzania – Developing the Kakono power plant
  Following the conclusions of the feasibility studies, AFD approved a concessional loan of €110 million, the EU approved a grant of €36 million, AfDB granted a loan of €150 million, and Tanzania used its own funds to round out the financing package for the development of the 87 MW Kakono hydropower plant on the Kagera River, as well as a 220 kV transmission network.
   
• Mauritania, RIMDIR project – Reinforcing access to electricity in rural areas through mini-grids
  ARE Scale-up support to the RIMDIR project enabled in-depth studies to confirm the relevance and scope of the technical solution chosen for each town under consideration. The financial feasibility of each project was also reviewed and confirmed, with special attention paid to the poorest households.
   
• Burkina Faso, YELEEN project – Developing solar energy production and facilitating its integration into the grid
  ARE Scale-up support made it possible to conduct a feasibility study on an initial project of the country’s Solar Plan: the construction of four photovoltaic plants connected to the national grid.