A consortium led by Gridworks and including Eranove and AEE Power, has signed three concession agreements with the Ministry of Hydraulic Resources and Electricity of the Democratic Republic of Congo (DRC). The agreements will see the consortium develop, build and operate three large scale, solar-hybrid, off grid utilities. The infrastructure will transform the lives and livelihoods of half a million people by providing power to three cities, Gemena, Bumba and Isiro in the north of the country. The three cities currently have no grid connection, and struggle to access reliable, affordable and clean power.
The consortium was selected as the winning bidder for the Essor Access to Energy (A2E) Initiative (Essor Project) after an international tender process run by the Project Coordination and Management Unit of the Ministry of Hydraulic Resources and Electricity with support and funding from the UK government. The 22-year concession agreements were signed in Kinshasa by Gridworks' CEO, Simon Hodson, on behalf of the consortium, and the Congolese Minister of Hydraulic Resources and Electricity, M. Mwenze Mukaleng; in the presence of the Governors of the three provinces, the UK's Ambassador to the DRC, Emily Maltman; representatives of UCM; and other key Congolese energy stakeholders. For further information see the IDTechEx report on Distributed Generation: Off-Grid Zero-Emission kW-MW 2020-2040.
The governments of the UK and DRC have been key partners in the development of the Essor Project. Essor aims to encourage business growth, job creation, and improvements in health and education by building solar powered infrastructure to supply reliable and affordable electricity.
The consortium, which is led by Gridworks, the UK government-backed investor in Africa's electricity networks, also announced the brand name of the companies that will ultimately provide power to the residents and businesses of the three cities. The companies will be branded as Moyi Power. Moyi is a word for sun in Lingala, one of four national languages of DRC, and the main language of the three cities that will benefit from the project. Moyi has committed to offer opportunities to local suppliers and consultants, and to local employees, in the development, construction and operation of the solar-hybrid infrastructure that will power the cities. This will directly create new, green jobs, as well as employment in the wider economy as small businesses grow thanks to access to reliable power.
The initial investment for the three sites will be at least US$100 million, funded with a mixture of equity from the consortium, debt provided by development finance institutions (DFIs) and capital grants from donors and DFIs. The consortium is in discussions for the provision of debt finance with both the Emerging Africa Infrastructure Fund and the African Development Bank (AfDB), and for the potential provision of grants with the Private Infrastructure Development Group (PIDG), The Rockefeller Foundation and the AfDB's Sustainable Energy Fund for Africa. Both AfDB and PIDG have also provided advice, support regarding the structuring of the transaction during the tender process. The development and financing process is expected to take at least 14 months. At the conclusion of financing and other contractual arrangements, Moyi Power will then begin an approximately 18-month construction period of the three power plants and associated distribution networks. It will then start operating the three utilities and provide power for remainder of the twenty two-year operating period of the concessions.
Distributed renewable energy projects such as Essor use isolated local power grids which distribute power to homes and businesses from renewable sources such as solar and wind. They operate independently of the national grid. Essor has generated significant interest from the DFI community because it provides a new approach for off-grid investment: a replicable model with the scale and regulatory underpinning to attract further investment in green field utilities across Africa.
The potential development impact for the project is significant in a country where less than 10% of the population has access to reliable electricity. The project is also expected to have a significant climate change impact as it cuts carbon emission through the displacement of diesel generation.
Gridworks' Chief Executive, Simon Hodson said: "For all the talk of financing and technology, we shouldn't forget why we're doing this project. It has the capacity to transform hundreds of thousands of lives by bringing reliable, affordable electricity to homes and to businesses in Northern DRC. In doing so, we help the people of these cities help themselves. By building electricity infrastructure we support local entrepreneurs to grow their businesses and create jobs, we help families get better education and healthcare, and we empower women. I'm delighted to sign the concession agreements on behalf of the consortium. In serving these three cities, Moyi Power has the critical mass and regulatory support that is missing from most mini-grid models. It can set an example to the off-grid industry, pushing down costs for consumers and attracting long-term capital from investors. The consortium now looks forward to working with the Government of DRC and with the financial institutions who have supported us to take the next step and to reach financial close."
The DRC's Minister of Hydraulic Resources and Electricity, Mwenze Mukaleng welcomed the signing, and said: 'Renewable Energy is a priority sector for the Government of Democratic Republic of Congo for growth, revenue generation and employment; with an ambitious target of providing universal access to electricity. I am very pleased to launch this project and hope it brings benefits to our country and our people. I welcome the partnership with the United Kingdom in promoting projects like Essor that has helped establish a partnership with Moyi power. These enterprises support our Government's own efforts to increase the rate of electrification and provide opportunities for further development.'
The UK's Ambassador to DRC, Emily Maltman said: 'This is a great example of the UK and DRC partnership benefiting the lives and livelihoods of the population in a green and sustainable way. Green growth is a priority for my Government and a theme for COP26 that we host later this year. This is a pilot project and I hope it will lay the foundation for many such projects to take off in other parts of DRC.'
AEE Power's Chairman, José ÷ngel González said: "AEE Power has a long history of commitment to the energy sector in Africa, particularly in the DRC, and we are very enthusiastic to be part of the ESSOR Project alongside our consortium partners and the Congolese authorities. We strongly believe that the participation of private capital is key for the development of the electricity distribution sector on the continent, and we are delighted to work in this pioneering project."
Eranove's CEO, Marc Alberola said: "This public-private partnership model combines local African and international expertise to meet the specific needs of its customer, while optimising natural resources. Minigrids perfectly represent the model that Eranove promotes on the continent since they make it possible to supply energy to isolated areas that lack it, and compensate for the infrastructure deficit while ensuring continuity of access to electricity and quality services. This innovation meets the challenges of economic and social development, as well as the fight against global warming."
Source: Rockerfeller Foundation
Top image: Pixabay