African Development Bank Approves $8M Loan for 25MW Solar PV Plant in Zambia

The funding will be drawn from the Sustainable Energy Fund for Africa (SEFA), a multi-donor special fund managed by the Bank, aimed at promoting sustainable energy projects across the continent.

The African Development Bank Group's Board of Directors has approved an $8 million concessional loan to finance the construction of a 25MW Solar Photovoltaic (PV) power plant in Zambia, a significant step toward enhancing the country’s renewable energy capacity. The funding will be drawn from the Sustainable Energy Fund for Africa (SEFA), a multi-donor special fund managed by the Bank, aimed at promoting sustainable energy projects across the continent.

The Ilute Solar Plant, located in Zambia’s Sesheke District, is expected to significantly contribute to the nation’s sustainable development goals and help unlock its renewable energy potential. Despite the project’s promise, it has encountered rising costs related to the COVID-19 pandemic and various logistical challenges. The development is spearheaded by Serengeti Energy Ltd and Western Solar Power Ltd, which were competitively selected by GreenCo Power Services Ltd. The Ilute project will serve as a pilot initiative for GreenCo’s innovative energy aggregator model, designed to enhance Zambia’s electricity supply dynamics.

Under this model, GreenCo will act as an intermediary off-taker, purchasing the electricity generated by the solar plant through a 25-year Power Purchase Agreement (PPA) and subsequently selling it in the Southern African Power Pool Day-Ahead Market. This structure is intended to foster greater investment in renewable energy projects by providing a stable revenue stream for producers.

Dr. Daniel Schroth, the African Development Bank’s Director for Renewable Energy and Energy Efficiency, expressed enthusiasm for the project, stating, “We are delighted to support the Ilute Solar PV project—this initiative will be the first to utilize Africa GreenCo as an intermediate off-taker. SEFA’s support has been instrumental in bridging the financing gap and will pave the way for future projects that contribute to Southern Africa’s energy transition.”

Anton-Louis Olivier, CEO of Serengeti Energy, acknowledged the importance of the Bank’s support, emphasizing that the loan will address the financial hurdles posed by the pandemic and rising costs. He noted, “The Ilute project is a testament to innovative collaboration and serves as a pioneering model for future renewable energy initiatives in Zambia as well as the wider region.” Serengeti Energy has established itself as a leading renewable independent power producer, specializing in the development, construction, and operation of utility-scale renewable energy plants tailored to meet the needs of both public and private off-takers.

The Ilute Solar PV project represents a critical advancement in Zambia’s energy landscape, aligning with the country’s objectives to increase renewable energy production and reduce reliance on fossil fuels. As Zambia continues to pursue its renewable energy ambitions, projects like Ilute are expected to play a crucial role in enhancing energy access and fostering sustainable development throughout the region.