Renewable energy attracts IFC loan for Equity Bank

In July last year, Equity Bank and Orb Energy partnered to offer tailor-made loans to enable homes, institutions and industries acquire solar water heating systems.

IFC has announced a USD100 million subordinated loan to Equity Bank Kenya to grow its lending operations Kenya.

The World Bank Group member’s loan facility will assist Equity Bank to increase its capital base and expand its lending programme to small and medium enterprises and climate finance operations that support renewable energy, green buildings, energy efficiency, and climate-smart agricultural projects in Kenya.

Equity’s renewable energy push

In July last year, Equity Bank and Orb Energy partnered to offer tailor-made loans to enable homes, institutions and industries acquire solar water heating systems.

Through the loans, Kenyans would be able to acquire solar water heaters that will see them save up to 60 per cent of their energy costs.

Orb’s Sunstream solar water heating systems cater for residential and buildings that consume over 100 litres of hot water a day as well as industrial facilities that consume up to 13,000 litres, or more, per day.

Solar energy disruption

In June last year, SunFunder agreed to finance a USD1.2 million loan facility for Questworks, a Kenyan firm focused on delivering a strong pipeline of commercial and industrial (C&I) solar projects.

As one of Nairobi’s earliest commercial and industrial renewable energy companies, Questworks has been involved in more than 2MW of solar projects in the country.

The company completed Nairobi’s first C&I solar installation in 2014, the 600kW hybrid system at Strathmore University, which was also Kenya’s first solar project to sign a power purchase agreement.

challenging Kenya Power’s monopoly

In February last year, PowerGen sought the approval from the Energy Regulatory Commission (ERC) to generate, supply and sell power to homes using its solar energy micro-grids.

The Nairobi-based renewable energy firm’s application is still under review.

PowerGen is seeking a licence to connect Unilever tea estate consumers in Kericho and other off-grid areas.

The company’s project consists of distribution networks, service lines for supplying electricity to households and small commercial establishments.

Two American companies Powerhive and Vulcan which are owned by Microsoft co-founder Paul Allen, are already in the Kenyan market selling small-scale solar power directly to consumers through mini-grids.

This means that if granted, PowerGen would become the third private company to sell electricity outside Kenya Power.

Equity Bank’s disruption of green lending

IFC will offer Equity Bank global knowledge in the SME and climate finance sectors, enhancing Equity’s ability to improve its environmental and social risk management system, develop a green lending strategy and build capacity for staff in key business units and target branches.

“Equity Bank’s expanded partnership with IFC will further strengthen our ability to deliver on a shared commitment to increasing financial inclusion and green finance. Equity Bank aims to disrupt the market by offering innovative financial products and services, and by pushing ourselves to ensure access to financial services are more readily available in Kenya,” said James Mwangi, CEO, Equity Bank Group.

Growing Equity Bank’s SME portfolio

Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa, said, “Our loan to Equity Bank helps an existing client expand and strengthen its lending in key areas. It promotes IFC’s climate action strategy in the financial sector, mainstreaming climate across different areas, including small and medium businesses.”

Equity Bank is an existing IFC client and previous loans have helped support the growth of the Bank’s SME portfolio.

The new loan supports the World Bank Group’s Climate Action Plan, which aims at increasing IFC’s global climate-related portfolio from 21 to 28 per cent by 2020, with total potential financing of USD29 billion annually by 2020.

You can also read how Green Mini-Grid Programme will light 3 DRC cities, Zambia’s surplus electricity to power the SADC and about the Swede agency investing USD20 million towards renewable energy in Rwanda.

Equity Bank focuses on extending financial services to under-served consumers and businesses. It pioneered agency banking in Kenya to broaden financial inclusion.

In the process, it made financial services accessible to small businesses and entrepreneurs in rural areas.

Through its foundation, Equity Group trained nearly two million low-income women, youth, and micro-entrepreneurs in financial literacy, and 25,303 micro and small-scale entrepreneurs in advanced small business development.

Eskom, BRICS bank sign $180 million renewable energy deal

The New Development Bank (NDB) and South African power utility Eskom on Monday signed a U.S.$180 million loan agreement to connect 670MW of renewable energy projects to the national grid.

Under the agreement, the bank will provide a loan with a sovereign guarantee to Eskom for renewable energy integration and transmission augmentation project.

The loan agreement was signed by NDB vice-president and chief operations officer (COO), Xian Zhu, and Eskom’s chief financial officer, Calib Cassim, during the 4th annual meeting of the New Development Bank in Cape Town.

The NDB’s Project Finance Facility (PFF) will be used to support the development of grid connection infrastructure, which is vital for the development of renewable energy projects.

The PFF will also support renewable energy development and reduce the country’s reliance on fossil fuels.

In a joint statement, the NDB said modern grid connection infrastructure will be used for renewable energy projects and augmentation of the Eskom transmission network to the identified areas.

The bank also said the project will also help increase electricity supply to the targeted areas for sustainable development.

The project will enhance the country’s capacity for renewable energy while achieving sustainable growth. It also aligns with the bank’s focus to support projects that aim at developing renewable energy sources.

The NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.

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Zhu said they were happy to support this important project that will contribute to the development of grid connection infrastructure in South Africa and support the shift to a more sustainable energy path in the country.

“The project is coherent with the bank’s focus on projects that incorporate sustainability from their inception. Moreover, we believe that supporting South Africa’s energy sector is fully in line with the Bank’s mandate and our role as a reliable development partner,” Zhu said.

Cassim said Eskom welcomed the support from NDB and said they were looking forward to fostering a valuable partnership with this organization whose mission is to enhance infrastructure for sustainable development in its member countries.

“The successful conclusion of this inaugural transaction with NDB will significantly contribute towards driving Eskom’s goals to reduce South Africa’s CO2 emissions,” Cassim said.

West Africa focused PE firm Verod Capital invests a $ 10 million in solar firm

Daystar Power receives 10 million US Dollars for expansion of solar power operations in West Africa

Anglophone West Africa focused private equity firm, Verod Capital Management (Verod), has announced that it has invested a $ 10 million in Daystar Power Group (Daystar), a leader in developing, owning and financing Commercial and Industrial sector hybrid solar generation projects across West Africa.

The investment will enable Daystar to further scale its deployments across the region, providing low cost, reliable and clean energy to its customers.  Verod will leverage on its wealth of experience and relationships in the West African corporate and industrial community to support Daystar’s growth.

Verod co-invested in Daystar Power with Persistent, a pioneer investor in the off-grid sector.  The investment will represent the 10th (and final) commitment of Verod Capital Growth Fund II LP, a $115 million fund launched in 2014 to invest in middle-market high growth companies.

Verod is active across various sectors, including but not limited to light manufacturing, consumer goods, business services, agriculture, education, healthcare and financial services.  Verod seeks to partner with companies with proven business models and high market growth potential, led by motivated management teams, to build sustainable and responsible regional leaders in their respective industries.

Founded in 2017, Daystar Power Africa, a solar energy company, specializes in providing individuals as well as enterprises with efficient solar energy solutions. Operating in Ghana, Nigeria and Tanzania, DayStar Africa provides energy to institutions for banking, consumer goods, agriculture and manufacturing needs. In addition to the $ 10 million, it plans to raise an additional $ 16 million in debt.

Since inception, Daystar has installed 1MW of off-grid solar energy solutions to Commercial and Industrial customers across Nigeria and Ghana. Daystar Power solutions deliver up to 25% of savings against current cost of energy and guarantees 99% uptime reliability to its clients while reducing carbon emissions from diesel generators.

Daystar Power provides Solar Power Systems ranging from 20 KWp and up to 5 MWp. Daystar provides clients with a monthly payment option that reduces capital outlay and thereby making it easier to switch to a cleaner energy solution. A key differentiator for Daystar Power is its focus on a high quality of service using only best-in class equipment with long-term warranties and a strong local technical support services team.

Read also: Green Mini-Grid Programme to light 3 DRC cities