The African Development Bank- (AfDB-) managed Sustainable Energy Fund for Africa (Sefa) has approved a $695 500 grant to NEO I SPV, a subsidiary of independent power producer OnePower Lesotho, to support the preparation of a bankable business case for the development of the winning project of the 2016 Lesotho 20 MW solar photovoltaic (PV) tender.
“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 Southern African Development Community region,” AfDB Renewable Energy and Energy Efficiency director Ousseynou Nakoulima stated in a press release earlier this month.
Multidonor facility Sefa’s 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.
The fund 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 the public sector to improve the enabling environment for private investments in sustainable energy.
Additionally, the bank’s Africa Climate Technology Centre will cover the costs for legal services and project implementation support.
The project is expected to become the first utility-scale solar PV project in Lesotho, with the power generated to feed into the national grid in Mafeteng province.
The project will contribute to a strategic phase-out of costly power imports, as the project will contribute about 13% to Lesotho’s maximum system demand of about 150 MW. By substituting 20 MW of costly imported power from Mozambique, it is expected to decrease retail electricity prices in Lesotho.
It will also entail greenhouse-gas emission substitution effects, as a result of reducing imports of thermal-generated power from South Africa. This, in turn, will promote independence of power supply, achieve substantial savings in the Budget and abate regional carbon dioxide emissions.
The project will further support rural development by stabilising the grid in Mafeteng province.
The project is aligned with the AfDB’s Ten-Year Strategy focusing on inclusive and green growth through the delivery of energy access, the bank’s Energy Policy and the New Deal on Energy for Africa.
At a national level, the project is also aligned with Lesotho’s National Electrification Master Plan, the Lesotho Electricity Authority Act No 12, of 2002, and its National Rural Electrification Programme, as well as with the Government of Lesotho Vision 2020 and its fifth Pillar of Poverty Reduction through Energy Access.