Scaling photovoltaic IPPs in Africa
Posted in Southern Africa Blog post Renewables Power Northern Africa Central Africa Western Africa Eastern Africa
The International Finance Corporation (IFC), a member of the World Bank Group, has launched a ‘one stop shop’ programme for the scaling up of photovoltaic (PV) independent power projects (IPPs) in Africa. The scaling solar package offered by IFC includes:
- advice to assess the right size and location of a site
- simple and rapid tendering
- fully developed templates of bankable project documents
- competitive financing and insurance
- risk management and credit enhancement products.
The Scaling Solar Package aims to make PV IPPs operational within two years and at competitive tariffs.
Central to the Scaling Solar Package is a template power purchase agreement (PPA) and government support agreement (GSA) that can be offered to bidders on a non-negotiable basis.
The Scaling Solar Package is intended to offer a bankable risk allocation for IPPs that enables the World Bank Group to provide debt and/or equity investments to IPPs without the need for detailed consideration of the risk allocation of the project, although any investment or loans by World Bank Group will remain subject to credit approval on a case by case basis. The risk allocation compares favourably to that offered by host governments in some of the most successful IPP markets in Africa and is broadly consistent with the risk allocation for Solar PV IPPs in emerging markets generally.
In contrast to the feed-in tariff schemes elsewhere in the region, the Scaling Solar Package will include a competitive process, which will attempt to drive down costs. The IFC will underwrite the financing of all qualifying bids, with bidders free to replace this lending with cheaper alternatives if available.
The Scaling Solar Package also provides for a partial risk guarantee from the World Bank and/or political risk insurance from IFC’s affiliate Multilateral Investment Guarantee Agency, both of which can be used by developers and lenders to augment the credit risk of the project.
Earlier this year IFC signed the first mandate for its Scaling Solar Package with Industrial Development Corporation Zambia (IDC Zambia) for the development of a first round of two 50MW solar PV projects. IDC Zambia has invited prospective bidders to submit sealed pre-qualification applications by mid-November 2015 .
IFC is expecting to announce new Scaling Solar mandates with a number of other African governments shortly. The aim of the Scaling Solar Package to quickly and efficiently mobilise international capital to develop solar PV projects on an IPP basis should undoubtedly benefit the economy of any host country.