AfDB Approves $2 Million SEFA Grant For Ethiopia’s Renewable Energy And Agriculture Mini-Grid Programme

The African Development Bank Group has approved a $2 million reimbursable grant through the Sustainable Energy Fund for Africa (SEFA) to support the development of two renewable energy mini-grid projects in Ethiopia. The funding will help advance the Lelicho and Murche mini-grid sub-projects under the Distributed Renewable Energy and Agriculture Modalities (DREAM) programme, which aims to improve electricity access while boosting agricultural productivity in rural communities.

The approval was granted by the Bank’s Board of Directors on July 17 and forms part of the broader $8 million programmatic financing package for the DREAM programme that was approved in May 2024. The grant will support projects being developed by RVE.SOL ETH Energy Generation Solutions PLC and will cover up to 50% of the capital expenditure required for the two mini-grid installations.

The DREAM programme was created through collaboration between the Government of Ethiopia, the African Development Bank, the Global Energy Alliance for People and Planet (GEAPP), and several other development partners. It is designed to address the interconnected challenges of water, energy, and food security by promoting renewable energy solutions that also support agricultural development.

A key feature of the programme is its innovative “ABC” model, which stands for Anchor loads, Business demand, and Community connections. This approach combines renewable energy mini-grids with productive agricultural activities, creating stable electricity demand while improving the financial viability of rural energy projects. By linking energy access with irrigation and farming, the programme seeks to attract greater private-sector investment into underserved rural areas.

Ethiopia’s Minister of Water and Energy, Habtamu Itefa Geleta, highlighted the importance of integrating water, energy, and food systems to achieve sustainable development. He said the DREAM programme represents an innovative approach that combines renewable energy access with irrigation and agricultural productivity, helping improve rural livelihoods while supporting the country’s long-term development goals. He also welcomed the partnership with the African Development Bank and other stakeholders in bringing the initiative to life.

Daniel Schroth, Director for Renewable Energy and Energy Efficiency at the African Development Bank, described the programme as an example of how innovative partnerships and concessional finance can unlock private-sector investment in underserved markets. He noted that the project offers a scalable model that strengthens energy access, improves agricultural productivity, and enhances climate resilience while creating jobs and supporting inclusive economic growth.

Carol Koech, Vice President for Africa at the Global Energy Alliance for People and Planet, said the DREAM programme demonstrates how renewable energy, when combined with irrigation, market access, and financial support, can transform rural communities. She added that the partnership aims to showcase a model that can be expanded across Africa to accelerate sustainable rural development and improve livelihoods through reliable clean energy access.