The Norwegian Agency for Development Cooperation (NORAD) will fund the African Trade Insurance Agency (ATI) with NOK500 million ($56 million) for the development of additional insurance or guarantee products in support of small- and medium-sized renewable energy sector initiatives.

 

The grant is geared towards the continued implementation of ATI’s Regional Liquidity Support Facility (RLSF).

 

RLSF was launched in 2017 by ATI and KfW, the German Development Bank, to address short-term liquidity risks in financing of small and medium sized renewable energy projects in sub-Saharan Africa, by combining ATI’s suite of insurance products with a liquidity support instrument.

 

The funding from NORAD, which will be split across first loss cash collateral for the various initiatives and technical assistance support for ATI, will be provided by the Norwegian Ministry of Foreign Affairs.

 

Since its launch, RLSF has supported four landmark solar projects in Burundi and Malawi – enabling over $150 million in project financing and a total installed capacity of 108.5 MW.

 

Beyond RLSF, ATI has supported other renewable energy projects across its member countries, enabling an installed capacity of over 500 MW.

 

ATI’s current gross exposure in direct support towards generation of renewable energy transactions stands at $210 million - with the grant and support from NORAD, this exposure is poised to increase significantly in the long term.

 

In addition to providing support towards RLSF, a portion of the grant will be deployed towards the development of additional guarantee or insurance instruments

 

 These new instruments will have a particular focus on the off-grid sector and other eligible forms of distributed renewable energy.

 

According to Manuel Moses, CEO of ATI: “The grant will enable ATI to support more projects reach financial close, thus increasing electricity generation capacity and supporting sustainable economic growth in Africa.” 

 

Thomas Duve, Director – Southern Africa, KfW, said: “For the African Energy sector, this means another step towards renewable energy.”

 

And Bård Vegar Solhjell, NORAD’s Director General, said: “This innovative instrument helps unlock the private finance needed to bridge the energy access gap, while also contributing to reduced greenhouse gas emissions. It is an important tool in catalysing much needed commercial investments in/to the energy sector in Africa. Dialogue with renewable energy developers has confirmed the high relevance of liquidity guarantees.” --OGN