Stable renewable energy in Madagascar

Hydro Madagascar, Madagascar

Who is our client?

Hydro Madagascar is a platform for the acquisition and development of a portfolio of several run-of-river hydroelectric projects in Madagascar. FMO is investing in conjunction with the Africa Renewable Energy Fund, a fund focused exclusively on investments in renewable energy projects in Sub-Saharan Africa.

Funding objective

FMO provides EUR 18.2 million in equity, EUR 7.3 million from AEF and EUR 10.9 million from Building Prospects.

Why we fund this project

Madagascar is highly dependent on expensive and polluting diesel-generators for electricity production. At the same time the country has great, but yet unharnessed, potential for renewable energy. In its New Energy Policy (NEP), the government identified an ambition to produce 85% of the country's power from renewable sources by 2030. The run-of-river hydroelectric projects produce energy that is more affordable and sustainable than the diesel generators. FMO is one of the first DFIs to act in a challenging country: doing makes the difference.

The Environmental and Social Risk category for Hydro Madagascar is A, due to impacts in land resettlement (IFC Performance Standards 5), biodiversity (IFC Performance Standards 6), and, for one project, cultural heritage (IFC Performance Standards 8). All projects in the portfolio cause economic displacement, whilst one also triggers physical displacement: compensation and livelihood restoration activities will be aligned with international best practices. While the projects are not situated in critical habitats or protected areas, biodiversity impact management will be introduced and is regarded key due to the nature of the assets and the bio-diverse ecosystems of the Malagasy regions.