The African Development Bank (AfDB)-managed Sustainable Energy Fund for Africa (SEFA) approved a US$ 695,500 grant to NEO I SPV Pty Ltd., a subsidiary of OnePower Lesotho Pty Ltd., to support the preparation of a bankable business case for the development of the winning project of the 2016 Lesotho 20 MW solar PV tender, foreseen to become the first utility-scale solar PV project in Lesotho.
The power will feed into the national grid in Mafeteng Province.
The Project will contribute to a strategic phase-out of costly power imports from Mozambique and to reducing reliance on imported coal-generated power from South Africa, thereby promoting independence of power supply, achieving substantial savings in the national budget and abating regional CO2 emissions.
Project will further support rural development by stabilizing the grid in Mafeteng Province.
“The Bank will support the structuring of the Project and lead it to bankability. Our ambition is to turn it into a reference solar PV project for the SADC Region.” stated Ousseynou Nakoulima, AfDB’s Director for Renewable Energy and Energy Efficiency. SEFA support is instrumental in leading the project to financial closure by funding technical and financial services, environmental and social impact assessment, lenders’ due diligence and risk allocation. In addition, the AfDB’s Africa Climate Technology Centre (ACTC) will cover the costs for legal services and project implementation support.
The Project will contribute about 13% to Lesotho’s maximum system demand of around 150 MW. By substituting 20 MW of costly imported power from Mozambique, it will decrease power retail prices in Lesotho. It will also entail greenhouse gas emission substitution effects as a result of reducing imports of thermally generated power from RSA.
The Project is aligned with the Bank’s 10-Year Strategy focusing on inclusive/green growth through the delivery of energy access, the Bank’s Energy Policy and the New Deal on Energy for Africa. On national level, the Project is aligned with Lesotho National Electrification Master Plan (NEMP), the Lesotho Electricity Authority Act No.12 of 2002 and its National Rural Electrification Program (NREP) as well as with the Government of Lesotho Vision 2020 and its 5th Pillar “Poverty Reduction through Energy Access.”
Launched in 2012, SEFA is a US $95-million multi-donor facility funded by the governments of Denmark, the United Kingdom, the United States and Italy. It supports the sustainable energy agenda in Africa through grants to facilitate the preparation of medium-scale renewable energy generation and energy efficiency projects; equity investments to bridge the financing gap for small- and medium-scale renewable energy generation projects; and support to the public sector to improve the enabling environment for private investments in sustainable energy. SEFA is hosted by the Renewable Energy Department of the AfDB.