Highlights and other developments

The year 2025 was both positive and challenging for AEF. The Fund continued to operate in difficult markets, consistent with its mandate to provide catalytic, risk‑tolerant capital. Although the year resulted in significant financial losses, these outcomes should be viewed in the context of AEF’s long‑term objectives, the risk profile of its portfolio, and an ongoing strategic recalibration.

In 2025, AEF committed €26.7 million in new investments, primarily in solar PV projects in Sub‑Saharan Africa. In addition, AEF supported investments made through the FMO Ventures 2.0 Program, via its €10 million contribution. The Fund also financed two capacity development projects to support existing portfolio companies.

A key milestone during the year was the signing of the transaction with Ilute Solar Limited in Zambia. Through a $3.5 million AEF loan, FMO mobilized approximately $18.5 million in additional financing, including $5 million from commercial banks. The financing supports the development of a 25 MWac solar power project. A distinctive feature of this transaction is that power will be sold under an agreement with GreenCo Power Services Limited, rather than a state‑owned utility. This reflects a broader regional shift towards merchant and regional offtake models in Southern Africa, which has the potential to unlock substantial new renewable energy capacity by reducing reliance on the financial performance of individual national utilities and by the ability to balance supply and demand regionally.

From a financial perspective, 2025 was a difficult year for AEF. Two main factors negatively affected the Fund’s results. First, several investments in the off‑grid sector —specifically solar home systems, mini‑grids and clean cooking— experienced financial underperformance. While these investments have delivered strong development impact, they carry elevated financial risk. In practice, achieving scale while maintaining economic viability in these sectors has proven challenging, resulting in valuation write‑downs and realized losses.

Second, the depreciation of the US dollar against the euro had a significant negative impact. Most AEF investments are denominated in US dollars, while the Fund reports in euros, leading to material foreign exchange losses being recognized in the annual accounts.

Together, these factors resulted in a net loss of €32 million for the year. This represents the fourth consecutive annual loss and has reduced both the Fund’s capital base and its revolvability. At year‑end 2025, revolvability stood at 79.8%, compared to 98.8% at the end of 2024. The target revolvability is 100%. Revolvability reflects the extent to which capital remains available for reinvestment.

Based on these experiences, AEF has decided to become more selective in taking on new off‑grid exposures. The Fund will continue to explore alternative approaches to support access to renewable and sustainable energy for low‑income and rural populations, while maintaining selective engagement with established off‑grid players with proven track records, as illustrated by the Sun King transaction. AEF will continue to prioritize larger, utility‑scale renewable energy projects that support the decarbonization of its target markets while delivering reliable power to the grid and fostering local entrepreneurship. The financing of three utility‑scale solar projects in 2025 illustrates this strategic focus on scalable, grid‑connected renewable energy.