In 2021 FMO received a further payment of EUR 10 million under the grant commitment signed in 2020 to top-up the Access to Energy Fund (AEF). While 2021 was still a difficult year for many AEF customers, due to COVID-19, the overall AEF portfolio was performing well.
AEF financed a mini-grid company, Winch, in Sierra Leone and Uganda. Mini-grids can help improve rural livelihoods, increase economic activities, create jobs, and add value to local products and services. They improve quality of life at the household level and can support the growth of local businesses. Despite the benefits, renewable mini-grids in rural areas still require grants and subsidies to be viable. The costs of supplying electricity to remote rural communities are many times higher than those in urban centers, partly because the high fixed costs of maintaining the grid are spread over a relatively small customer base. In addition, the ability of rural customers to pay for electricity is often lower.
The Energy Access Relief Fund (‘EARF”) is a newly created debt fund, to provide Covid19 relief funding to off-grid energy companies: Solar Home Systems, clean cooking, and mini-grids. The Access to Energy Fund (“AEF”) provided USD 5 million to offer liquidity to support the companies to continue providing clean energy and help stabilize the sector by providing security for local clean energy jobs.
After a first investment in 2020, AEF financed another two solar projects in Burkina Faso in 2021. Burkina Faso is one of the poorest countries on place 182 of the Human Development Index Report 2020. Only 19% of the population has access to electricity (60% of the urban versus 3% of the rural population). Currently, over 80% of the country’s electricity is non-renewable and the fuel for thermal power plants needs to be imported. To become more self-dependent, use the abundant solar irradiation, and benefit from the low cost of solar power, 6 concessions were granted by the Burkina Faso government in 2018.