The African Development Bank (AfDB)-managed Sustainable Energy Fund for Africa (SEFA) has approved a US$ 965,000 grant to Oxygen Energy Private Limited to support the preparation of a bankable business case for the development of a 20MW off-grid solar PV rooftop project on buildings owned and managed by Old Mutual Property Group Zimbabwe countrywide.
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.
The joint Oxygen and Old Mutual Zimbabwe project aims at compensating for the significant baseload lapses of the national grid and at providing reliable electricity to hundreds of Small and Medium Enterprises (SMEs) that are already tenants at the Old Mutual premises. In doing so, the Project will substitute large quantities of diesel oil used as backup fuel.
“This highly innovative project will provide reliable and competitive solar power to multiple SMEs throughout the country. Working with a strong domestic financial institution has been essential in overcoming common barriers and will help achieve speed and scale,” said 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 feasibility work, legal advisory in the preparation of key project agreements, and financial advisory towards structuring a bankable project. In addition, the AfDB’s Africa Climate Technology Centre (ACTC) will cover the costs for environmental and social impact assessment and Grid Interconnection Study.
Through its unique wide-latitude off-grid lay-out and economically resistant business model, the Project will generate significant socio-economic benefits, mainly in terms of a rural and urban economic boost for SMEs which will be empowered to resume, keep up, or even expand their commercial activities.
It will also have an impact on employment creation since the Project will activate, re-activate or create new employment in SMEs (as a result of availability of steady power) for around 3,790 men and 4,166 women. Finally, the project will lead to a diesel displacement of more than 12 million liters per year, to associated direct savings and will also avoid around 33,000 tons of CO2 emissions per year.
This project is aligned with the Zimbabwean Agenda for Sustainable Socio-Economic Transformation (ZimAsset 2013), the Government of Zimbabwe’s preference for distributed energy solutions, and with the Electricity Act of 2009 which opened up the power sector to Independent Power Producers (IPP).
The project is in line with Oxygen & Old Mutual Zimbabwe’s commitment to United Nations Sustainable Development Goals (SDGs), Old Mutual’s strategic focus to lead in local private sector adoption of clean renewable energy tackling Zimbabwe’s current electricity deficit and the development of green sustainable buildings.
On the side of the Bank, the project is fully aligned with the AfDB’s strategic goal to support inclusive and green growth by promoting access to clean, modern, reliable and affordable energy services in rural areas and with the Bank’s ZimFund for contributing to development efforts in Zimbabwe.
This project is also contributing to the New Deal on Energy for Africa, by promoting the aspirational target of “off-grid” electricity access of reaching 75 million connections by end of 2025.