The Energy Transition & Access Facility for Africa (ETAFA) is a new local currency subordinated debt vehicle that was launched by the Global Energy Alliance for People and Planet (GEAPP) and Nigerian investment firm Chapel Hill Denham (CHD).
A creative financing program called ETAFA would make it possible to use US$50 million to promote distributed renewable energy (DRE) projects in Nigeria. The Chapel Hill Denham Nigeria Infrastructure Debt Fund will provide an additional US$40 million after the first US$10 million contribution from GEAPP.
The financing provided by ETAFA is set up as a low-cost, long-term loan denominated in Nigerian Naira, which will significantly cut the cost of DRE solutions, especially for users with lower incomes.
The fastest and most economical way to expand access to clean electricity on the African continent is widely recognized as DRE. Although Nigeria is well-positioned to gain from DRE, the sector’s expansion is being constrained by a shortage of subordinated capital and local currency funding for developers.
DRE developers run the risk of incurring losses as a result of currency mismatches between their revenues and borrowings since they are unable to get long-dated local currency financing. These obstacles will be removed by ETAFA, which will also aid in maximizing DRE’s potential across the nation.
Chapel Hill Denham appreciates the assistance from GEAPP, which will help the company with two of its strategic initiatives, according to CEO Bolaji Balogun of CHD. lowering the percentage of Nigerians without access to power and promoting the use of renewable energy sources more quickly. By 2030, CHD hopes to raise up to US$1 billion through partnerships with international organizations like GEAPP for sustainable energy projects in Nigeria and Africa. Additionally, it aims to cut in half, within the same time span, the number of people in Nigeria and Africa without access to modern energy.
According to Stefanie Fairholme, Head of Investments at GEAPP, “Renewable energy development is essential for Nigeria to transition to clean energy and accomplish important climate targets, while driving economic and social growth. “GEAPP’s partnership with CHD aims to tackle the obstacles to Nigeria’s transition to clean energy by providing the de-risking capital needed to stimulate the financing of projects that bring clean electricity to underserved communities and promote their economic development and sustainable livelihoods.”
As part of GEAPP’s larger impact strategy, this new cooperation will enable 4 million new mini-grid connections, reaching 20 million people and generating 50,000 jobs in Nigeria.
The Global Energy Alliance for People and Planet (GEAPP) is a partnership of the philanthropic sector, governments in developing and advanced economies, and experts in technology, public policy, and financing. Our shared goal is to make it possible for LMIC to transition to a clean energy, pro-growth model that quickens inclusive economic growth and universal access to electricity while assisting the international community in achieving crucial climate targets over the coming ten years. As a coalition, we hope to cut future carbon emissions by 4 gigatons, increase one billion people’s access to clean energy, and create 150 million new jobs. Together with charitable partners, IKEA Foundation, The Rockefeller Foundation, Bezos Earth Fund, and GEAPP work to create the necessary market conditions, market capacity, and enabling environment for private sector solutions. They also deploy high-risk capital to support just transition solutions and to encourage the development of new business models.