Around 600 million Africans do not have access to electricity, and there is a huge deficit in power generating capacity to supply the market leading to frequent blackouts and unreliable distribution.
One of the main challenges is the financial predicament of most national utility companies in Africa making it difficult for them to play the role of long-term creditworthy buyers and holding back investors from financing new power producing capacity.
Cathy Oxby, Co-founder and CCO of Africa GreenCo, visited IFU and gave a learning session on GreenCo’s role in overcoming the challenges and promote the installation of more renewable energy in Southern Africa.
Africa GreenCo acts as a creditworthy intermediary and trader, buying electricity from Independent Power Producers (IPPs) like solar farms and wind parks and selling it to large consumers. In doing so, it pays the utility companies for the service they provide in wheeling the power across their networks.
“We act as an aggregator of both supply and demand across a regional portfolio, diversifying risk across technologies and geographies. We help attract investment in IPPs by providing a 20 – 25 years’ power purchase commitment, securing a reliable revenue stream for the IPPs. We then sell this power to a portfolio of bilateral customers with varying tenors and also actively trade on the Southern African Power Pool. Our access to Southern African Power Pool backstops the bilateral contracts, reducing the need for customers to provide credit support and reducing our own risk, thereby making it a sustainable business model.”
Cathy Oxby, Co-founder and CCO of Africa GreenCo.
Africa GreenCo was established in 2019, was the first pure energy trader to join the Southern African Power Pool, and is now operating in several Southern African countries including Zambia, South Africa, Zimbabwe and Namibia. The company has built a strong pipeline of 7.5+ GW of new renewable energy generation across the region and is actively exploring expansion into neighbouring countries.
IFU has supported Africa GreenCo, first with a convertible loan as part of its Impact Ventures (PDP) capital and then with an equity investment as part of its High Risk High Impact pool of capital.
“IFU sees GreenCo’s potential impact on three different levels,” said Ina Hoxha, Global Director of Blended Finance @ IFU, “(i) at the company level starting a new company and its immediate effects on local employment and increased access to energy, (ii) at the carbon emissions levels by supporting the build out of greenfield renewable energy in Africa, but also (iii) at a systemic level: GreenCo’s business model supports higher penetration of renewables in Southern Africa and aims to achieve system level change where overall emissions decline AND power is available where it is needed, which would significantly contribute to countering climate change and providing the energy needed for Africa to industrialize”
“I would like to thank IFU for being a strong supporter throughout GreenCo’s evolution and look forward to continued close cooperation to ensure Africa GreenCo’s success in contributing to the green transition and improving living conditions in Africa,” said Cathy.