Darway Coast, a company that produces renewable energy, will profit from a climate finance blending facility worth N10 billion (£10 million). This was disclosed on Wednesday, November 9, 2022, by credit guarantor InfraCredit in a formal statement that was released on that day.
In a statement, Darway Coast Nigeria Limited’s green debt issue—the first transaction under InfraCredit’s clean energy funding program—was highlighted for its credit enhancement thanks to a co-financing arrangement with the £10 million climate finance blending facility, funded by the UK Foreign, Commonwealth and Development Office (FCDO).
The funding will be used to build six grid-less communities in the southern Nigerian states of Rivers and Abia isolated solar mini-grids with a combined capacity of 526.1 kilowatts (kW).
Benefits of the Project
After its completion, the project will electrify up to 7,711 unconnected homes and small businesses, generate up to 497 temporary and permanent jobs, prevent the emission of 4,856 tonnes of greenhouse gases (GHG), and improve access to renewable energy for use in productive applications.
The listed initiatives and assets meet the Climate Bonds Standard Solar Sector Criteria, and the financing has earned the Climate Bonds Initiative’s green seal of approval.
Vicky Ford, the UK’s minister for Africa, announced in February 2022 that the government would be giving £10 million (N5.6 billion) through Infracredit to encourage institutional investment in off-the-grid clean energy projects, including solar mini-grids in Nigeria.
De-risking investments
According to the official statement from InfraCredit, the program will aggregate, de-risk, and unlock domestic institutional investments to support qualified clean energy projects in Nigeria to help the country reach its 2030 goal of universal electrification as well as the SDG 7 target of ensuring access to affordable, reliable, sustainable, and modern energy for all, while also putting the nation on a path to a more sustainable future.
Information on investments in renewable energy in Nigeria: Since 2014, clean energy investment in Nigeria has fluctuated between single-digit, double-digit, and triple-digit millions of euros annually, according to GET-invest.
The majority of this investment comes from overseas sources, which contributed 79% and 86%, respectively, of the sector’s investment in 2017 and 2018.
However, by 2025, 4 million solar home systems are expected to be deployed, according to the Nigeria Renewable Energy Master Plan.
Additionally, according to Sustainable Energy For All’s (SE4All) Agenda for Nigeria, solar home systems and mini-grids will have a combined capacity of 8 gigawatts (GW) by 2030, accounting for 18% of the country’s total capacity.
Investment opportunities
According to InfraCredit, the UK-funded facility makes it the first-ever certified blended local currency green debt issue for a solar mini-grid project in Nigeria by allowing domestic institutional investors to directly invest in a 7-year fixed rate local currency debt financing for the project.
The facility is anticipated to grow through funding from additional development partners to co-finance a pre-assessed initial pipeline of over $128 million that will mobilize at least N26.8 billion of domestic institutional capital to build 22.7 megawatts (MW) of isolated off-grid renewable energy projects in 580 underserved communities across 32 states in Nigeria.
Additionally, it will link 172,535 unconnected homes and small businesses, bring about 6,977 new jobs, and lessen greenhouse gas (GHG) emissions by 394,403 tons.
For the record, InfraCredit and the Rural Electrification Agency (REA) signed a Memorandum of Understanding (MoU) in August 2022 to enable credit enhancement and financing to private sector mini-grid developers to enable adequate power generation and supply to underserved and unserved areas. This will help remove long-term financing bottlenecks for off-grid operators in the energy sector.
