Renewable Energy Independent Power Projects

MIGA has a long history in supporting private sector investment in renewable energy independent power projects (IPPs) as well as transmission and distribution.

MIGA guarantees have played an instrumental role in introducing private sector investment into countries’ energy systems. In many developing countries a limited track record or a recent history of fragility can pose significant challenges to attracting private investment. Through its range of non-commercial risk and payment guarantee solutions, The Platform’s guarantees have boosted investor confidence, and contributed to the successful implementation of the first IPP projects in Djibouti, Burkina Faso, Malawi, and Gabon, among others.

These renewable energy-based projects have positively contributed towards the host countries’ ambitions of transitioning to renewable based electricity, decarbonizing the energy sector, reducing the overall cost of generation, and contributing to the overall financial sustainability of the utility.

Burkina Faso

Boosting solar energy project to replace fossil fuel power generation

MIGA issued €4.5 million in guarantees to GreenYellow SAS, of France, covering its equity and quasi-equity investments into Société de Production d’Energie Solaire de Ouagadougou SAS (SPES Ouagadougou) for a period of up to 20 years.

In 2021, Burkina Faso had just 357 MWs of installed capacity, mostly from ageing and expensive heavy fuel oil generation and using imports from Côte d’Ivoire and Ghana to serve base demand. The country’s strategy aimed to structurally reduce the cost of electricity service by: (i) shifting the thermal-intensive energy mix towards cheaper sources, namely renewables, particularly solar generation; (ii) increasing affordable imports through regional integration; (iii) developing firm baseload capacity to meet peak demand; and (iv) investing in the national grid to enable it to absorb intermittent solar power.

The 30MWp SPES Ouagadougou project helped narrow Burkina Faso’s power deficit in a cost-effective manner, while supporting the country’s transition to renewable energy. MIGA’s support sends a clear signal to the private sector of the possibilities in the Sahel region.

Gabon

Helping develop first private sector-led hydropower plant

In 2022, MIGA issued €25.3 million in guarantees to Meridiam for equity investments into Asonha Energie SA, operator of the 35MW Kinguélé Aval Hydropower Plant in Gabon. The 20-year guarantee provides protection from breach of contract, expropriation, transfer restriction and currency inconvertibility, and war and civil disturbance.

Gabon has a comparatively high national electrification rate of 93 percent. However, the country’s power generation capacity was under strain due to the growing population, increased urbanization, and industrial development.

Gabon historically relied on hydropower plants to generate most of its electricity, but the rapid growth of demand and lack of planning in recent years, resulted in reliance on expensive and polluting thermal generation using liquid fuels accounting for more than half of national electricity production.

The Kinguélé Aval hydropower plant is expected to supply around 13 percent of the electrical needs of Libreville, equivalent to 9 percent of the energy needs of the country, while enabling the replacement of existing thermal capacity.

The project is the first IPP in Gabon at a cost of €179 million. It will bring low-cost clean power generation capacity to support electricity demand in Gabon’s capital, Libreville, and help restore financial viability of Gabon’s power sector. Additionally, the project will produce clean supply equivalent to around 32,000 new customers, increase GDP by $40 million, and create an estimated 880 indirect and induced jobs.

MIGA’s support for this first IPP project sends a positive signal to the market within the context of private investment in hydro power and in the power sector in Gabon.

Egypt

Supporting first refinancing of a solar project through a bond structure

In February 2022, MIGA provided $ 120 million in guarantees to Virto Finance, S.A.R.L, to refinance six photovoltaic (PV) power plants operating in Benban PV Solar Power Farm. MIGA guarantee covers the risks of Breach of Contract, Expropriation, Transfer Restriction and Inconvertibility, and War & Civil Disturbance for up to 20 years.

MIGA’s support provided positive development benefits by de-risking country risks and thereby allowing institutional investors to support emerging market, clean-energy projects on a long-term basis. The new financing provides more cost-effective financial terms for the underlying projects and frees up capital that can be applied for new projects. Moreover, the decrease in borrowing costs allows sponsors to pass the cost savings to the government of Egypt.

The six project enterprises are currently operational and are in the Benban Solar Park in the Aswan Governorate, in the Upper Egypt Region.

This was the first refinancing of Egypt Solar FiT 2 projects through a bond structure and combined application of breach of contract and liquidity support, demonstrating the viability of a new financing and de-risking model in the solar power sector that could draw in institutional investment.