US$15.5m raised to scale innovative renewable energy buyer and services provider in Zambia
4 May 2022, Lusaka, Zambia: ARE Member InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), the Danish Investment Fund for Developing Countries (IFU) and ARE Member Electrification Financing Initiative (EDFI ElectriFi) have together committed US$15.5m to enable Africa GreenCo (GreenCo) to scale its innovative offering as Zambia’s first renewable energy buyer and services provider.
GreenCo’s Chief Investment Officer, Pug Bennet, said “Reaching this financial close will enable us to support a portfolio of up to 110MW of renewable energy. We are extremely grateful to our investors and our partners from the Government of Zambia, ZESCO, the SAPP team and the existing SAPP members for their trust and support of innovative new business models such as GreenCo and look forward to working alongside the industry leaders as the market grows from strength to strength. We are now ready to mobilise significant private sector investment in renewable energy whilst strengthening the national and SAPP electricity markets.”
GreenCo’s Lusaka-based company, GreenCo Power Services was established in 2020 with support from IFU and InfraCo Africa (through its sister company, PIDG Technical Assistance). GreenCo’s model involves purchasing power from renewable independent power producers (IPPs) and selling that electricity to utilities, private sector offtakers (i.e. commercial and industrial users) and competitive markets in the Southern African Power Pool (SAPP). The monies raised by the second fundraising announced today will provide GreenCo with working capital and the Liquidity Buffer necessary to support a portfolio of up to 110MW of renewable energy.
The Zambian Minister of Energy Hon. Peter Chibwe Kapala, MP, welcomed this investment saying, “GreenCo Power Services Limited is the first Intermediary Power Trader in Zambia following the enactment of the 2019 energy sector legal framework. GreenCo introduces to the Zambian electricity market a creditworthy buyer of renewable energy generated from IPPs. The entry of GreenCo on the Zambian electricity market signifies Government’s commitment to create a conducive environment that will attract private investments in an open, transparent and competitive electricity market. This investment will support Zambia’s development of a greener and diversified energy mix: one that creates jobs and new business opportunities, whilst at the same time positioning Zambia as the region’s power trading hub.”
InfraCo Africa’s Chief Investment Officer, Claire Jarratt said, “PIDG and InfraCo Africa are pleased to be investing alongside IFU and EDFI ElectriFI to grow the potential of GreenCo’s innovative approach. With strong support from the Government of Zambia and national utility, ZESCO, GreenCo aims to both increase the attractiveness of Zambia’s renewable energy sector to private investors and to complement wider efforts to incorporate more clean energy into the country’s energy mix by reducing reliance on sovereign financial support to bring that new generation capacity online.”
In its first 12 months of operation, GreenCo has been accepted as the first member under the Market Participant category and the first new member of the Southern African Power Pool (SAPP) since 2018. GreenCo has awarded its first power purchase agreement tender to a 25MW pilot solar facility in Sesheke in the country’s Western Province. It has also negotiated a power purchase agreement with a large hydro facility to purchase and sell the plant’s excess generation.
“GreenCo is an innovative business that has the potential to increase private investments in renewable energy by acting as a creditworthy intermediary between private producers of renewable energy and offtakers. To invest in this kind of business is in line with our strategy to support the green transition in developing countries and improve access to electricity. Therefore, we are pleased to follow up on our 2020 investment in Africa GreenCo and join efforts with the company as well as our co-investors InfraCo Africa and EDFI ElectriFI,” said Otto Vinther Christensen, Vice President at IFU.
“EDFI ElectriFI is delighted to join forces with IFU and InfraCo Africa to support GreenCo in the realisation of its initial portfolio of PPA with renewable IPPs. This catalytic investment is made through our Country Window dedicated to Zambia and will enable the emergence of a creditworthy private offtaker, allowing for the deployment of additional renewable generation capacity in the country. The support of the Government of Zambia has been key to the development of this unique initiative,” explained Quentin De Hoe, ElectriFI Senior Investment Officer at EDFI Management Company.
Alongside conventional renewable energy IPPs, GreenCo offers a complementary approach to scaling up renewable energy investment in Zambia, helping to mitigate climate change impacts, improve security of electricity supply and increase efficiency in the country’s power sector. As members of the SAPP and with access to additional funding, the company is well positioned to demonstrate the potential of its model to transform the region’s wider renewable energy landscape.