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Empower New Energy partners with Climate Fund Managers and Norfund to accelerate solar investments.

Norwegian company closes USD 74 million equity deal to finance solar energy for commercial and industrial off-takers.

On the 29 September,2022 at the the Africa Renewables Investment Summit (ARIS)that took place in Cape Town, South Africa, the Norwegian solar development and investment company Empower New Energy (Empower) signed a landmark agreement to raise USD 74 million from a consortium led by Climate Fund Managers (CFM), manager of Climate Investor One (CIO).

The partnership plans to develop, finance, own and operate an initial 150 MW of solar projects in Africa over the next three years. This milestone will see Empower become one of the leading renewable investment platform companies serving the Commercial and Industrial (C & I) market in Empowers’ target markets in Africa.

“This new investment capital will enable Empower and our project partners to solarize more than 50 African companies, reducing electricity costs and CO2 emissions and creating thousands of local jobs. This is the largest single capital raise in Africa’s solar C & I (Commercial and Industrial) market so far”, said Terje Osmundsen, Founder and CEO of Empower New Energy.

At the signing, Andrew Johnstone, CEO of Climate Fund Managers, said; “Over the past few years, Empower has built a unique and scalable investment model for Africa’s C & I market that fits well with the business philosophy of Climate Fund Managers. We are confident that this transaction lays a solid foundation for building a leader in the African renewable energy market”.

Empower New Energy is a solar platform investment company that raised its first capital of USD 7.9 million in 2019 from ElectriFi, Norfund and 12 private investors. The company has so far carried out eight solar investments for industrial and agricultural off-takers in Egypt, Ghana and Nigeria and has signed contracts worth more than USD 30 million with other off-takers in Egypt, Morocco, Ghana and Nigeria.

“As an early investor in Empower New Energy, we have been delighted to see how the company has already provided companies with clean, reliable and affordable solar energy that help cut both costs and emissions. We look forward to continue our partnership in contributing to sustainable growth in the commercial and industrial sector in Africa in the years to come, says Anders Blom, Vice President Clean Energy in Norfund”.

Munyaradzi Jani, Executive Director at RenewAfrica.Biz commented on the signing saying; “We are honoured that the Empower and its partners chose ARIS as platform for this momentous signing for a fund that will help transform the businesses in Africa through solar energy. ARIS is a great platform to conclude deals in renewable energy, and we encourage more investors to invest in Africa’s renewable energy sector.”

Norfund is investing USD 12,5 million in this capital raise. In addition, the investor consortium is joined by Janeiro Energy AS, an investment company partly owned by Svein Harald Øygard, a profiled Norwegian economist and investor.

Africa is estimated to have about 60% of the world’s solar resources but has only received about 1% of the world’s installed solar capacity. In 2021, Africa’s share of total investments in renewables fell to below 1%. The largest barrier to realizing renewable projects in Africa is high capital costs. The International Energy Agency has estimated that the capital costs of investing in clean energy in sub-Saharan Africa can be more than five times higher than in the USA and Europe. In addition, renewable energy projects are generally smaller in Africa than in other parts of the world, resulting in prohibitively high transaction costs.

Empower's platform investment model helps spread the risk across multiple off takers and countries and to keep transaction costs low. Financing costs are reduced by raising debt at portfolio level. “In large parts of Africa, companies tend to pay 25-50% more for electricity than elsewhere in the world. As a result of our investment in on-site solar power production, often including batteries, our off-take partners can reduce electricity costs by 15-20% or more”, says Osmundsen.

Empower’s impact investment platform has been developed with support from Norad (the Norwegian development agency) as well as the Sustainable Energy Fund for Africa (SEFA), a fund managed by AfDB (African Development Bank).

In addition to the equity capital, the consortium will aim to raise debt, enabling Empower to invest a minimum of USD 100 million over the next three years. This will enable the company to develop, build, own and operate more than 150 MW of solar projects (including batteries) for commercial and industrial users in Africa, avoiding 200,000 tons of CO2 and generating more than 240 GWh of competitively priced solar PV electricity on an annual basis, and creating or protecting approximately 15,000 jobs. Furthermore, Empower and its investors have agreed to earmark 1% of the revenues generated by the projects for a community development programme, focused on projects that can deliver high impact in socially disadvantaged communities in targeted markets.

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