AfDB Approves $8M for Innovative Mini-Grid Pilot Programme in Ethiopia

DREAM represents a first-of-its-kind approach for Africa’s mini-grid industry, integrating mini-grids with agribusiness operations at nine sites across Ethiopia.

The African Development Bank Group’s Board of Directors has approved $8 million to support the rollout of a pioneering pilot mini-grid programme with potential Africa-wide benefits. The funding, provided by the Bank-managed Sustainable Energy Fund for Africa (SEFA) in the form of concessional loans, grants, and risk mitigation, will finance up to 50 percent of mini-grid capital expenditures for the Ethiopia Distributed Renewable Energy and Agriculture Modalities (DREAM) programme.

DREAM represents a first-of-its-kind approach for Africa’s mini-grid industry, integrating mini-grids with agribusiness operations at nine sites across Ethiopia. This pilot aims to test the commercial viability and effectiveness of this innovative business model.

The programme was developed in collaboration with the Global Energy Alliance for People and Planet (GEAPP), which is providing co-financing, and various Ethiopian ministries, including the Ministry of Water and Energy, Ministry of Irrigation and Lowlands, Ministry of Agriculture, Agricultural Transformation Institute, and other stakeholders.

Dr. Eng. Habtamu Itefa Geleta, Ethiopia’s Minister of Water and Energy, emphasized the integrated approach to addressing agricultural productivity and energy access. He stated, “We are glad to partner with the African Development Bank, through SEFA, and other project stakeholders on this innovative DREAM pilot. With the long-standing partnership we have with the Bank, my ministry reaffirms its commitment to work with all stakeholders and ensure the DREAM becomes a reality.”

Joseph Ng'ang'a, GEAPP’s Interim CEO, highlighted the programme’s dual focus on ending energy poverty and tackling the climate crisis. He noted, “DREAM communities won’t just get electrification but will also get reliable power for irrigation and clean drinking water. The programme will also enable the local economy to create enormous value and accelerate rural development for close to 300,000 people.”

Dr. Daniel Schroth, the Bank Group’s Director for Renewable Energy and Energy Efficiency, underscored the innovative nature of the DREAM project, saying, “The DREAM project provides an innovative approach to addressing the water-energy-food nexus in Ethiopia. It demonstrates the importance of partnerships and the catalytic role played by the Sustainable Energy Fund for Africa (SEFA) in crowding-in private sector investments in energy access.”

The pilot’s successful conclusion is expected to pave the way for potential scale-up and replication of the model in Ethiopia and other African countries, offering a sustainable solution to rural development and energy access challenges.