June 22, 2024
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AfDB Approves $8 Million for Innovative Mini-Grid Pilot in Ethiopia

The African Development Bank Group’s Board of Directors has approved $8 million to support the rollout of a pioneering pilot mini-grid program with potential benefits across Africa.

The funding, provided by the Bank-managed Sustainable Energy Fund for Africa (SEFA) in the form of concessional loans, grants, and risk mitigation, will finance up to 50 percent of mini-grid capital expenditures for the Ethiopia Distributed Renewable Energy and Agriculture Modalities (DREAM) program.

DREAM represents a groundbreaking approach for Africa’s mini-grid industry, testing the commercial viability and effectiveness of integrating mini-grids with agribusiness operations at nine sites across Ethiopia.

Developed in collaboration with the Global Energy Alliance for People and Planet (GEAPP), which is providing co-financing, and Ethiopia’s Ministry of Water and Energy, Ministry of Irrigation and Lowlands, Ministry of Agriculture, Agricultural Transformation Institute, and other stakeholders, the pilot aims to demonstrate a scalable and replicable model for Ethiopia and other African countries.

“Water, energy, and food are critical for our sustainable well-being,” said Dr. Eng. Habtamu Itefa Geleta, Ethiopia’s Minister of Water and Energy. “The Ethiopian government is tackling agricultural productivity and energy access with an integrated approach. We are glad to partner with the African Development Bank, through SEFA, and other project stakeholders on this innovative DREAM pilot. With our longstanding partnership with the Bank, my ministry reaffirms its commitment to work with all stakeholders to ensure the DREAM becomes a reality.”

GEAPP’s Interim CEO, Joseph Ng’ang’a, highlighted the program’s dual benefits of electrification and rural development: “GEAPP was created to address energy poverty and the climate crisis through a just transition to renewable energy, and DREAM is a prime example. Leveraging strategic partnerships, DREAM communities will receive reliable power for irrigation and clean drinking water, accelerating rural development for nearly 300,000 people.”

Dr. Daniel Schroth, the Bank Group’s Director for Renewable Energy and Energy Efficiency, emphasized the innovative nature of the project: “The DREAM project provides an innovative approach to addressing the water-energy-food nexus in Ethiopia. It demonstrates the importance of partnerships and the catalytic role played by SEFA in attracting private sector investments in energy access.”

The pilot’s success could pave the way for its expansion across Ethiopia and replication in other African countries, marking a significant step towards sustainable development in the region.

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