The EU-funded impact investment facility, the Electrification Financing Initiative (EDFI ElectriFI), and UK’s Renewable Energy Performance Platform (REPP) have invested €8.8 million into a project-finance vehicle in Lesotho led by electricity access provider OnePower (1PWR) to build 11 solar mini-grids for rural communities.
The project vehicle set up by EDFI ElectriFI, REPP, and 1PWR, named Sotho Minigrid Portfolio SPV is managed by Camco Clean Energy and aims to increase the electricity access rate in rural areas of Lesotho. The special purpose vehicle also receives support from the USAID under the Power Africa Initiative, EEP Africa, UK Aid through the Transforming Energy Access program, United Nations Capital Development Fund, and the United Nations Development Program.
Both EDFI ElectriFI and REPP have granted LSL 75 million (approximately €4.4 million), each for the solar mini-grid financing vehicle in equity and senior debt financing. The funding will provide solar PV mini-grids connected to battery storage systems to 11 rural communities in Lesotho.
According to Quentin De Hoe, EDFI Senior Investment Officer at EDFI Management Company, “This investment is an excellent opportunity for EDFI ElectriFI to support OnePower in its mission to provide stable electricity to more than 20,000 citizens, but also to seven health centers in Lesotho.”
The new SPV will create more than 100 jobs during the construction phase and operation of the solar PV mini-grids. With a combined capacity of 1.8 MW, these installations will be connecting 7,300 households, as well as small businesses and utilities, and generate up to 3,480 MWh of electricity per year. These installations are envisaged to avoid annual emissions of 2,780 tons of CO2 equivalent, annually.
Sotho Minigrid Portfolio SPV will also implement its project with the support of the European program GET.invest, which aims to promote investments in decentralized renewable energy. The SPV will sell the electricity at LSL 5 (€0.3) per kWh, which is very competitive for an almost cost-reflective tariff, by local standards.
The green mini-grids will help raise the level of electrification in the southern African landlocked territory, where only 44.64% of the population has access to electricity in 2019, according to World Bank data. The situation is more complicated in rural areas of the country where the rate of electricity access is estimated below 20%.