"Challenges and best practices in financing to accelerate industry decarbonisation", OECD Series of Webinars on low carbon hydrogen and industry decarbonisation, 14 June 2023

1. 1
African Development Bank
Power, Energy, Climate & Green Growth Complex
Wale SHONIBARE | Director
Energy Financial Solutions, Policy and Regulation
“CURRENT (AND BEST) PRACTICES IN
FINANCING INDUSTRY DECARBONISATION”
OECD Webinar Series of Webinars on low-carbon
hydrogen and industry decarbonisation
14th June, 2023

2. 2
member countries,
incl. all 54 African
countries
81
Strategic priorities to accelerate
Africa’s development
5
Member countries
Regional Hub
Headquarters
209
Billion US Dollars
of authorized capital
ratings with a stable outlook
from all main rating agencies
1964
year when
the AfDB was
established
26
of outstanding loans with
an attractive pricing
capital
increase
in 2019
125
percent
AAA
Billion
US Dollars
The African Development Bank is Africa’s premier financial institution with an extensive pan
African footprint

3. 3
Africa’s energy deficit is widening: with a rapidly expanding population, the need
for accelerated efforts to power the continent is greater than ever before
Source: SDG7 Tracking Framework; UN World Population Prospects 2020; Medium Variant Scenario; World Energy Outlook, 2021, International Energy Agency; AfDB analysis
Africa’s energy needs are urgent and growing, with structural
transformations projected to drive energy consumption
59%
43%
2.3%
100%
2.1B people will live in Africa in 2040, up from 1.3bn in 2020
of the population will live in urban areas by 2050
increase in investment in manufacturing by 2030
growth in household consumption by 2030
increase in electricity demand by 2040
150%
increase needed in energy production to reach universal
access by 2030
600 million people are still without access to electricity : this number
declined in the 5 years prior COVID, but increased by 6% since 2019
2000 2005 2010 2021
Population in million
200
2015
400
600
800
1,000
1,200
Pop. with
access
Pop. w/o
access

4. 4
Governments’ ambitions to reach universal access by 2030 require an eight-fold increase
in power sector investment, mostly in low-carbon generation and grid networks
Source: Africa Energy Outlook 2022, World Energy Outlook, 2021, International Energy Agency; Africa Energy database; AfDB analysis
Making up for the current deficit of energy supply and maintaining
grid infrastructure is projected to cost appr. USD 25 billion per year
0
5
10
15
20
25
30
2019 2022-2030
3
22
3
63% in solar PV,
wind and other
low-carbon
resources
Capacity additions have only increased by 7% since 2019, mostly
driven by progress recorded in Northern and South Africa
2015 2016 2017 2018 2019 2020 2021 (e)
Installed capacity in GW Northern Africa
South Africa
Sub Saharan Africa (excl. South Africa)
+24% +7%
50
100
150
200
250
0
Total investments in Grid, Off-grid and T&D
Off-grid
Grid
Unit in USD billion, per annum
Approx
x8

5. 5
Africa’s electricity generation mix varies across the sub-regions of the continent,
shaping different energy transition pathways
Sources: Pathways to a renewable energy future in Africa, UN High-Level Champions Team, 2021; Tracking SDG7 database; International Energy Agency database; AfDB analysis

6. 6
Africa’s emission profile is different to the rest of the world: it has marginally contributed to
global GHG emissions and presents an energy sector that is not as polluting
Source: Climate Analysis Indicators Tool database; AfricaScoping Study, ClimateWorks Foundation, 2020; Global Carbon Atlas Database, Climate Watch Database; AfDB analysis
Breakdown of global GHG emissions per region (%)
15
33
17
29
61
32
4
3
2020
Cum.*
Breakdown of GHG emissions per sector and fuel combustion (%)
*Cumulative value as of April 2021. Total historical value goes back as far as data is available: 1750 for Europe,
1785 for North America, 1830 for Asia, and 1884 for Africa and South America
34
40 39
35
29 30
24 23 22
2000 2010 2018
Africa accounts for only 4% of global emissions, with 78%
of its emissions driven by 4 countries
The energy sector contributes to only 40% of Africa’s emissions, while natural
gas contributes to 19% of Africa’s emissions
1,321Mt CO2 in total
South Africa: 34%
Egypt: 21%
Algeria: 13%
Nigeria: 10%
Emissions from sectors
888
76 79 79
14 12 11
4 5.2 6.3
2000 2010 2018
RoW ** Africa RoW Africa RoW Africa
2000 2010 2018
Total value
in Mt CO2
31,364 1,214
39,410 1,426
42,740
45
33
22
2018
Emissions from fuel combustion
34
45
21
2018
RoW Africa
2018
1,245
32,268
**RoW refers to the Rest of the World

7. 7
The least-cost way to reach full access by 2030 and to meet demand from newly
connected households is to accelerate the deployment of decentralized systems
Sources: Africa Minigrid Developers Association 2022, SE4All State of the Mini Grid Market Report, 2020; Africa Energy Outlook 2022, International Energy Agency; AfDB analysis
Total number of mini-grid connections
Between December 2019 and December 2021, the number of connections
almost doubled, a 95% increase in the connection rate.
Population in million
The deployment of decentralized solutions to 440m people
will be needed to reach universal access by 2030
0
100
200
300
400
500
600
Urban areas Rural Areas
190
590
SHS
Mini-grids
Grid extension
Grid densification
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
2014 2015 2016 2017 2018 2019 2020 2021
Total Connection
788 1,024 1,932
5,044
18,523
40,735
52,405
78,271

8. 8
Although renewables will play an important role in Africa’s pathway to net-zero,
African countries cannot rely solely on variable renewable energy to power
their economies
Sources: IRENA Database; Decarbonizing Africa’s grid electricity generation, CDC, 2021; AfDB analysis
African countries can rely on abundant and cheaper RE sources of
power, with a generation potential 100x higher than current levels
However, the degree to which solar and wind can be deployed is
constrained by their inherent intermittency and integration cost
SOLAR PV WIND
GENERATION POTENTIAL BY REGION, in TWh/year
Northern 109,033 130,316
Western 103,754 40,846
Central 61,153 12,395
Eastern 219,481 165,873
Southern 162,817 108,236
GLOBAL AVERAGE PRICE IN AUCTIONS, in USDc/kWh
2011 28.44 7.65
2013 12.25 6.63
2015 8.15 7.11
2017 5.80 4.30
2019 5.58 4.92
System costs associated with managing Variable Renewable Energy
are not included in LCOE and not paid for by the developers (mostly
Independent Power Producers) of RE projects: in Kenya for example, the
contribution of VRE to the national installed capacity rose from 0.3% in
2013 to 14.6% in 2019, with system costs requiring an additional USD 50
million per year.
Switching to renewables can cause load balancing challenges for a grid
system that does not have a reliable baseload. In the case of the use of
battery storage, even though their cost decreased by 87% between 2010
and 2019, their storage capacity is still limited. Furthermore, a flexible
use of storage requires high-resolution forecasting capacity for both
supply and demand that most power utilities in Africa do not have.

9. 9
Financing Africa’s energy transitions is critical as climate finance flows currently
remain far below the continent’s investment needs
Sources:
Financial Innovation for Climate Adaptation 2022, Global Center on Adaptation; The Global Landscape of Climate Finance 2021, Climate Policy Initiative; AfDB analysis
▪ Adaptation investment needs for Africa are estimated to USD 579
billion over the period of 2020 to 2030 (annual need 52.7 bn p.a)
▪ The average global mitigation investment needs to achieve Paris’
1.5°C target is estimated to range between USD 1.6tn and USD 3.8tn
p.a. until 2050 for energy systems alone. While Africa faces a lower
mitigation risk compared to other regions, significant investment is still
required to prevent lock-in to harmful or non-adapted technologies.
▪ A much larger volume of climate finance needs to be channeled to
Sub-Saharan Africa, with more focus on adaptation:
➢ In 2019 and 2020, Sub Saharan Africa received just over 3% of
global climate finance, amounting to approximately USD 19bn.
➢ Most global finance flows are directed to mitigation (93% in
2019-2020), leaving climate adaptation under-funded and under-
represented
➢ 24% of climate finance in Africa is dedicated to adaptation:
this represents the highest proportion than any other region in the
world, but is still insufficient to address the needs of the
continent
▪ The private sector has a key role to play in deploying low-carbon
infrastructure and new technologies that meet Africa’s access goals, but
only represents 13% of climate finance channeled in Africa in 2019 and
2020 (only 2% in case of total adaptation during the same period)
Destination of climate finance, average value per year*
*Based on data from 2019 and 2020
10
16
20
31
32
292
105
83
35 9
89% public, 11% private

10. 10
2000
Public sector
Private sector 19.9
7.6
0.03
Total cumulated approvals in the energy sector, in USD billions
2010 2021
Source: AfDB portfolio analysis
20%
80%
The African Development Bank provides holistic support to its Regional Member Countries in
their just energy transitions whilst accelerating electrification efforts
The Bank has committed USD 20 billion to develop the
African energy sector since 2000
The Bank deploys a suite of financial and policy-based solutions for its
Regional Member Countries and private sector clients
Financial
Solutions
▪ Lending instruments to provide long-term debt to public and
private clients, with blended finance solutions
▪ Guarantees to mitigate the risks attached to investments in Africa
▪ Equity participation to bring scarce risk capital to transformative
projects
Special
Initiatives
▪ Desert to Power to build up to 10GW of new solar power capacity in
the Sahel region
▪ Great Green Wall Initiative to deploy nature-based solutions to
prevent desertification
▪ Africa Energy Market Place to accelerate sector reforms and fast-
track priority transactions
Capacity
Building
▪ Africa NDC Hub to support long-term planning for countries’ energy
transitions ahead of their participations to the COPs and promote
partnerships
▪ ClimDev Special Fund-Africa to support the generation of high-
quality climate information in Africa and develop capacity building
technical assistance for policymakers

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* List is not exhaustive. Other criteria may apply depending on the financial instrument
▪ SEFA is a multi-donor facility designed to catalyze private sector investments into
early-stage renewable energy and energy efficiency markets:
✓ Cumulative donor contributions: USD 300m
✓ Additional investments mobilized: USD 665m
✓ Reach: 56 projects in 30 countries; +6000 MW of renewable energy
▪ Three thematic areas: Green mini-grids for underserved populations in rural areas; Green
Baseload to reduce the use of fossil fuel generation; Energy efficiency: focus on optimizing
generation capacity and reducing energy intensity
▪ Different instruments:
✓ Technical Assistance window (from USD 1m to 5m): reimbursable grants for
project preparation, and grants for activities that will directly unlock investments
✓ Concessional Investment window (up to USD 10m): investment grants incl.
Results-Based-Financing mechanism; junior equity in intermediated structures,
concessional debt in project finance structures
▪ Eligibility:
✓ Private sector*: Proven track-record, some pre-feasibility work carried out, evidence
of Government’s endorsement, equity available or evidence of interest, project in
countries with limited/no experience in RE, etc.
✓ Public sector: Regional Member Countries, energy sector agencies, parastatals and
regional bodies.
In 2021, the Bank approved a EUR 39m loan for the
construction of the 34MW Kinguélé Aval
hydroelectric project in Gabon; comprising: EUR
20m from the Bank, EUR 10m from the Africa Growing
Together Fund and EUR 9m in concessional
financing from SEFA.
This project is Gabon’s first IPP, and highlights the
catalytic effect of SEFA: it is the first time since the
conversion of SEFA into a Special Fund that the
Concessional Investment window is mobilized to close
financial viability gaps.
The Project will provide 34 MW generation capacity to
support Gabon’s 100% clean energy target (with 80%
hydropower). The flexibility of this plant, with
storage capacity of 170 MWh, allows for ancillary
services and the integration of variable renewable
energy capacity
SEFA support for the first IPP in Gabon
Kinguele 34MW Hydropower Project
The Sustainable Energy Fund for Africa (SEFA) provides catalytic finance to
unlock private sector investments in renewable energy and energy efficiency

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▪ Eligibility:
➢ Financially viable private
companies
➢ Public sector companies in
the process of privatization
and regional institutions
▪ Ownership approach:
➢ Ceiling of 25% ownership
➢ Board representation
mandatory
➢ Clearly defined exit clauses
▪ Overall interest:
➢ SME-focused Private Equity
funds
➢ Financial intermediaries
➢ Innovative structures
Geography
SSA with East Africa
focus
(excl. South Africa)
SSA (70%) & South
Africa (30%)
East Africa(60%)
& North Africa
(40%)
SSA with East &
West Africa focus
(excl. South
Africa)
5 to 50 MW RE
projects
On-grid RE;
Distributed RE;
Resource efficient
infra.
Small to medium
RE projects
On-grid RE
Distributed RE
Small hydro, wind,
geothermal, solar,
biomass
Low carbon, clean &
sustainable energy
generation
Run-of-river
hydro, onshore
wind, solar pv,
geothermal
Run-of-river
hydro, wind,
geothermal, solar
pv, biomass
USD 25.5 m
junior equity
USD 20 m
ordinary equity
USD 32.5m
ordinary equity
USD 25m
ordinary equity
Focus
Technologies
AfDB share
Examples: Private Equity portfolio of the Bank targeting clean energy projects
Name
The Bank uses equity and quasi-equity participation as instruments of investment to play a
catalytic role in attracting other investors and lenders to financially viable projects and entities

13. 13
▪ AfDB climate finance teams coordinate and lead the
implementation of different facilities that provide
multiple instruments such as grants (including for
project preparation), concessional debt and equity.
▪ The Bank has increased its climate finance to 41%
of its total approvals in 2021, amounting to USD 2.6
billion and equivalent to a 7% increase compared to
2020.
▪ 92% of all the Bank’s approved projects are
designed with climate change and green growth
considerations (67% adaptation and 33% mitigation).
▪ Through the AfDB’s Climate Action Window (CAW)
in ADF-16 , the bank aims to mobilize USD 429 million
in global climate finance for 37 low-income countries in
Africa.
AfDB
Trust Funds
External Funds
(AfDB as
Implementing
Agency)
Africa Climate
Change Fund
Clim-Dev
Special Fund
Green Climate
Fund
Climate
Investment
Funds
The Global
Environment
Facility
The Adaptation
Fund
The Bank is at the forefront of resource mobilization efforts to channel climate finance to
Regional Member Countries and mainstream adaptation and mitigation into its projects
Canada-African Development
Bank Climate Fund

14. 14
Case Study 1 - Leveraging Energy Access Finance Framework
Program
size
Indicative cost (equity and debt): EUR 815 million
• GCF: USD 170.9 million
• AfDB: USD 164 million
• Other co-financiers: USD 315 million
• Equity contribution: USD 310 million
Product
offering
De-risk and scale
investments:
• (Concessional)
Guarantees
• (Concessional)
Subordinated debt
• Senior debt
Technical Assistance:
• Support FIs engage & invest in DRE
• Transaction structuring/ advisory
• Support governments’ policy
development
Technology
SHS Mini-grids Solar C&I solutions
Country
focus
Ghana, Guinea, Ethiopia, Kenya, Nigeria, and Tunisia
(additional countries may be added)
Financial
institution
Guarantor
(Portfolio of)
DRE project(s)
Guaranteed
obligations
Loan
Guarantee
When the project does not
fulfill guaranteed payment
obligations, guarantor will
compensate the FI
Partial Credit Guarantees (PCG) was
provided under different structures
Including the tranching (first loss) and pro
rata structures

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Case Study 2 - The Desert to Power G5 Sahel Financing Facility (DtP)
The overarching objective of the Facility is to develop climate-resilient and a low emission power generation
pathway in the G5 Sahel countries by increasing solar power generation and electricity access:
1. GRID INVESTMENTS: to enable solar power generation paving the way
for the uptake of a regional solar market and provide energy storage for grid
stability.
2. UTILITY-SCALE SOLAR GENERATION: incremental finance for IPPs to
catalyze the uptake of private sector investments resulting in the installation
of 500MW of new solar generation capacity.
Areas of Impact
Energy
Climate
Resilience
3. TECHNICAL ASSISTANCE: the DtP is backed by a technical assistance
component to support the development of a clear and predictable
environment for private sector solar investments.

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Case Study 3 - Off-grid & Mini-Grid: DRC Green Mini-Grid Program
Financing
• Total estimated CAPEX of three projects is USD 140 M and additional financing may be required for the expansion of
generation and distribution capacity.
• In October 2018, the Board of GCF approved USD 20 M concessional loans and USD 1 M technical assistance
grant for the Program.
• AfDB plans to commit up to USD 20 M senior debt for the entire Program, and propose a Mandated Lead Arranger /
Coordinator role
Objective
• The AfDB-GCF Green Mini-Grid Program for DRC will provide blended finance to three pilot mini-grid projects in the
towns of Bumba, Gemena and Isiro, where concessionaires will be selected through a competitive tendering process
led by the Ministry of Energy and Hydraulic Resources.
• Each mini-grid would consist of a hybrid solar PV power plants of around 5-10 MW (at COD) coupled with the battery
storage and distribution network, offering 24 hours electricity supply.
Development
Impact
• The overall number of connections is expected to reach approximately 21,000 connections in Year 1 and 36,000
connections in Year 5.
• Replacing diesel-based off-grid generation and kerosene lighting with renewable energy sources, significant emission
reduction is expected.
• The Program will standardize and demonstrate a model for private-led mini-grid financing, which will open up a market
for mini-grids investment in other parts of the DRC and Sub-Saharan Africa.
Gemena
Isiro
Bumba
Kinshasa

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Example: Bboxx Rwanda
USD 2.25m inventory
financing operation for a
tech company leader in
solar water pumps and
irrigation solutions for
smallholder farmers
▪ The Facility for Energy Inclusion (FEI) is a
USD 500m debt financing platform anchored
by the African Development Bank via the
Sustainable Energy Fund for Africa (SEFA).
▪ FEI targets small-scale projects from private
sector companies to catalyze financing
solutions that are adapted to the decentralized
renewables industry; debt in local currency.
▪ To date, USD 61m has been deployed by FEI
On-Grid in 8 countries, and USD 57m
deployed by FEI OGEF in 9 countries.
▪ The objective of this facility is to:
➢ Aggregate capital;
➢ Structure bankable projects;
➢ Accelerate development of electricity
access solutions using clean energy.
FEI OGEF (Off-Grid)
▪ Instruments:
➢ Debt for working capital, inventory
finance and consumer finance from
USD 2m to USD 20m.
➢ Corporate, secured or senior loans
to SPVs in asset-backed structures
(securitization).
➢ EUR, USD or local currency, with a
tenor ranging from 1 to 5 years.
▪ Eligibility:
➢ Lending to companies and SPVs
domiciled in Africa.
➢ SHS providers and operators,
distributed energy equipment
manufacturers.
FEI On-Grid
▪ Instruments:
➢ Long-term amortizing loans in project
finance structures (senior and
subordinated) in EUR, USD or local
currency, with a tenor up to 15 years, up
to USD 30m.
➢ Technical Assistance using reimbursable
grants for late stage projects.
▪ Eligibility:
➢ Companies and SPVs domiciled in
Africa
➢ Small-scale renewable energy projects
of less than 25 MW (IPPs, mini-grids,
captive commercial & industrial projects)
USD 8m loan in
Rwandan Francs
secured by inventory,
to finance consumer
receivables.
Example: Sunculture Kenya
Case Study 4 - Off-grid & Mini-Grid: DRC Green Mini-Grid Program

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Thank you
Wale Shonibare | Director Energy Financial Solutions,
Policy and Regulation Department
w.shonibare@afdb.org