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New US clean-energy centre aims to shepherd African projects to bankability

22nd March 2013

By: Terence Creamer

Creamer Media Editor

  

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The primary aim of the newly inaugurated US-Africa Clean Energy Development and Finance Centre, which was formally opened in Johannesburg in March, is to help close the prevailing financing gap that is preventing African renewable-energy projects from advancing beyond the concept stage to bankability.

The centre has a mandate for all of sub-Saharan Africa, but is housed at the US Consulate General, in Sandton.

It has immediate access to $20-million for project-preparation assistance, but is a joint venture between three US development finance agencies that have been given a specific mandate to increase clean-energy related trade and investment between the US and Africa.

The three agencies are the US Trade and Development Agency (USTDA), the Overseas Private Investment Corporation (Opic) and the Export-Import (Ex-Im) Bank.

USTDA Africa business development manager Jason Nagy reports that the centre is “transaction focused” and will be looking to support project sponsors to “get their projects across the finishing line”.

The African Union’s New Partnership for Africa’s Development Agency energy division head Professor Mosad Elmissiry describes the dearth of bankable projects as a key renewable-energy “bottleneck” and has, thus, endorsed the centre’s initial focus on early-stage project development.

Africa, Elmissiry stresses, has significant low-carbon energy resources that remain either untapped or under exploited and says that improving the project pipeline will be a critical first step in matching these resources with the continent’s growing energy demand profile.

The centre will support large-scale renewables initiatives, such as project developers seeking to participate in further bidding rounds under the South African government Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). But Nagy adds that it will also target smaller-scale distributed power solutions of less than 5 MW.

Opic business development director Peter Ballinger, who has relocated to South Africa from India to lead the centre, says a one-stop shop approach will be adopted to ensure that the financial and technical resources of each agency are available to project sponsors.

Ballinger and Nagy are the only officials from their respective agencies posted outside of the US.

USTDA sub-Saharan Africa regional director Paul Marin argues that the resources being allocated to the initiative are in line with President Barack Obama’s recently released policy directive for Africa.

The directive, which was published in June last year, has a specific objective of promoting low-emissions development strategies across Africa by “mobilising financing to support the development and deployment of clean energy”.

Ex-Im Bank’s Africa director Rick Angiuoni says that bank, which offers export credit for US companies selling product abroad, has a specific Congressional mandate to prioritise sub-Saharan Africa. In 2012, the bank approved record African authorisations of $1.6-billion and its pipeline of opportunities remains “strong”.

Angiuoni also reports that Ex-Im is optimistic that some of its US clients will participate in the third REIPPPP bid window, which is expected to close during the second half of 2013.

Edited by Creamer Media Reporter

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