African Development Fund Approves $24.5 Million Grant To Help São Tomé And Príncipe Launch Major Clean-Energy Transition Project

The African Development Fund African Development Fund has approved a grant package of US$24.5 million for São Tomé and Príncipe São Tomé and Príncipe, forming the foundation of a US$30 million investment designed to transform the country’s energy sector. The initiative will help the island nation reduce its dependence on expensive, polluting diesel generation and advance a long-term transition to clean, reliable power.

The investment supports the Energy Transition, Efficiency, and Expansion Project (ETREEP), a comprehensive clean energy programme set to benefit more than 200,000 citizens across both islands. ETREEP is a key element of the country’s National Energy Compact, through which the government has committed to achieving universal electricity access and a 50 percent renewable energy share by 2030. The project will be implemented from May 2026 to November 2031.

At present, nearly 95 percent of electricity in São Tomé and Príncipe is generated from imported fossil fuels, costing about US$0.30 per kilowatt-hour—among the highest rates in Africa. Daily outages of three to four hours disrupt essential services such as hospitals, schools and local businesses. Technical and commercial losses exceed 34 percent, meaning a large share of generated power never reaches consumers.

ETREEP aims to address these structural challenges and help the country shift toward a more resilient and affordable energy system.The project is built around three interconnected components. First, 1,000 energy-efficient LED streetlights will be installed across São Tomé Island to improve safety in public areas while reducing electricity consumption. Second, a new 4-megawatt-peak solar photovoltaic plant with a 2 MWh battery storage system will be constructed on Príncipe Island, making one of the world’s key biodiversity hotspots fully energy self-sufficient using renewable power.

Third, the project will rehabilitate and upgrade the low-voltage distribution networks on Príncipe and modernise the national dispatch centre to better integrate new renewable energy sources. More than 40,000 prepaid meters will also be installed to expand access and reduce commercial losses.The initiative includes significant institutional support for Empresa de Água e Eletricidade (EMAE) Empresa de Água e Eletricidade and the Ministry of Infrastructure and Natural Resources Ministry of Infrastructure and Natural Resources.

Capacity-building activities, technical training and consulting services will strengthen long-term operational, financial and regulatory capabilities within both institutions.The project is expected to benefit 50,000 households directly, with 2,000 new electricity connections established. Billing and collection rates are projected to rise from 50 percent to 80 percent, significantly reducing the subsidies that strain the national budget.

Non-technical losses are targeted to fall from 34 percent to 20 percent.ETREEP also addresses social and economic priorities. Women, who are disproportionately affected by unreliable energy and safety concerns, will benefit from improved street lighting, cleaner home energy solutions and new job opportunities.

Youth—representing nearly 79 percent of the population—will gain access to employment opportunities and green skills training, with 200 young people set to receive technical training in solar and electrical maintenance.Funding for the project includes US$19.02 million from the African Development Fund’s ADF-16 allocation and US$5.43 million from the Transition Support Facility Pillar I Transition Support Facility.

A further US$5 million is expected from parallel financing partners, and the government will contribute in-kind support. Pietro Toigo Pietro Toigo, the African Development Bank Country Manager for Angola and São Tomé and Príncipe, noted that the project represents more than infrastructure investment—it demonstrates a belief in the potential of small island nations to achieve sustainable, modern energy systems through committed partnerships.