Finland to invest in African wind-energy projects

Finland has pledged 114 million euros over four years for clean energy projects in developing countries – that will be repaid with interest, over the next 25 years.

Foreign Trade and Development Minister Anne-Mari Virolainenhas this week pledged some 1.5 million euros to fund climate projects, particularly in low-income countries, according to the Foreign Ministry. The sum is part of a commitment to plough a total of 114 million euros into clean energy projects in developing countries.

The ministry noted in a statement that the funding will bankroll projects to harness wave energy or research power storage options, or alternatively – utilised to develop new business models within the industry.

The minister signed the technical cooperation agreement with the World Bank’s financing arm, the International Finance Corporation (IFC), during the Bank’s on-going annual meeting in Bali, Indonesia this week.

Investment to be repaid with interest

The new cooperation agreement is an extension of the climate fund that Finland established in collaboration with the IFC last year (2017). At the time, Finland pledged 114 million euros over the next four years to support private-sector investments in climate and energy projects in developing countries. Whilst releasing the funds, the ministry stated that the funds are not a grant, but will be repaid with interest over the next 25 years.

The fund’s first three-million-euro investment went to a major project fronted by the Moroccan energy company, Gaia Energy. The company aims to build 22 power production facilities running mainly on wind power in nine different African countries: Ivory Coast, Ghana, Kenya, Tanzania, Nigeria, Tunisia, Algeria and Morocco.

More private backers needed

The nominal capacity of the plants is projected at three gigawatts, and will increase current wind power capacity in Africa – by about 50%. According to initial estimates, electricity production by the facilities will be equivalent to the output by energy firm Fortum’s two nuclear reactors in Loviisa, southeast Finland.

Finland’s investment complements the funding provided by the IFC. In the fiscal year 30 June, 2017 – the World Bank body forked out roughly four billion euros for what it terms “smart-climate” financing to businesses in developing countries.

Overall, it has delivered over 17 billion euros in financing for developing countries. The IFC said it hopes to work with Gaia Energy to bring in private investment for the wind power project, which needs several billion euros for completion.

Source: African Strategic-Ventures (ASV) & Yle-news.