“Scaling Solar” of the World Bank – option to enter the African market?

PrintMailRate-it

In a nutshell:

“Scaling Solar”, the aid programme of the World Bank, has been run for over two years now and the first successes can already be reported. Zambia closed the first auction round and launched the second round. The first auction round is being conducted in Senegal, while Ethiopia was the next country after Madagascar to be included in the programme.

 

Scaling Solar is an aid programme launched in January 2015 by IFC (International Finance Corporation), a member of the World Bank Group, with the aim of promoting fast and transparent further development of the photovoltaics (PV) market in Africa. The aid programme was launched in different African countries and is conducted in collaboration with the local governments. The programme aims to facilitate and accelerate the implementation of PV projects in Africa to the effect that PV projects should be planned, auctioned and implemented within a maximum of two years. To that end, auction agendas are developed in different countries participating in the project. In addition to the pre-drafted contract templates for the projects, pre-approved financing opportunities from IFC should be available to the
winning bidders.
 

Zambia

Zambia closed the first auction round with success. The auction
round was carried out for two power plants of up to 50 MWp each. The auction round was conducted by the Zambian Industrial Development Corporation (IDC). The winners of the auction round are Enel Green Power SpA and a consortium consisting of Neoen SAS and First Solar Inc. Both winners concluded a 25-year Power Purchase Agreement with the state electricity supplier ZESCO. The Neoen / Firstsolar consortium will construct a 54MWp power plant and receive a price of USD 6.02 per kWh. Enel will construct a 34 MWp power plant at a price of USD 7.84
per kWh. As these are the lowest solar electricity prices in Africa, they attracted international attention. The construction of the PV power plants is due to begin shortly. The Neoen / Firstsolar consortium received a comprehensive financing and guarantee package from the World Bank.

 

Currently, the second auction round is being held in Zambia. The
auction is held for two projects with a capacity of ca. 70 MWp and 110 MWp, whereas the 110 MWp project will be divided between two separate locations. Also in these projects, ZESCO will be the power off-taker under a Power Purchase Agreement. The first stage of the auction round (Request for Prequalification) has already been accomplished. Shortlisted were 12 out of 21 applicants:

 

Figure 1
 
The second stage of the auction round (Request for Proposal), during which winners for the two projects will be selected, will start shortly. Provided that all economic, legal and technical conditions are met, the price is the only eligibility criterion in the second stage of the auction round. As in the first auction round, IDC will establish a special-purpose vehicle (SPV) for each project. After the contract is awarded, the winners will acquire a clear-cut majority stake in the SPV while a smaller portion of shares remains with IDC. IDC will also obtain in advance the rights to land and necessary permissions for the SPV.

 

Overall, IDC plans to implement 600 MWp as part of the Scaling Solar project. The third round is likely to be advertised yet in 2017.
 

Senegal

In Senegal, a total of 200MWp should be auctioned as part of the Scaling Solar project. Currently, the first round is being conducted for three projects with a total capacity of 100 MWp.The first stage of the auction round has been already conducted and the following 13 applicants were short-listed.


Figure 2 

 

The second stage of the auction round is due to start shortly.

 

Madagascar

In Madagascar, an auction agenda for 40 MWp is currently being
developed as part of a preparatory due diligence review.
 

Ethiopia

In 2017 it was announced that Ethiopia was the fourth country
to participate in the Scaling Solar programme. IFC and the
Ethiopian Electric Power (EEP), the national electricity supplier in Ethiopia, have concluded an agreement under which IFC will advise Ethiopia on matters relating to the procurement of up to 500 MWp as part of the Scaling Solar initiative. The first round is planned to be held yet in 2017, during which up to 200 MWp should be auctioned.
Scaling Solar remains an attractive programme, also to German
companies looking to enter the African market. Because –despite
the great potential for renewable energy projects– the implementation of projects in Africa is often difficult due to the missing or insufficient legal and regulatory framework and delays, Scaling Solar is a welcome initiative. Long-standing disputes concerning land plots and lengthy negotiations of power purchase agreements are not uncommon in Africa. The Scaling Solar approach where these problem areas are
initially solved thanks to an SPV is thus a big step forward. Rödl & Partner has an established network of wholly-owned offices and associate offices in the whole of Africa and will be happy to assist you with handling your application for a Scaling Solar project.

Contact

Contact Person Picture

Anna-Lena Becker, LL.M.

+27 21 4182 350
+27 21 4182 367

Send inquiry

 How we can help

 Trendreport - growth countries renewable energy

The trendreport on renewable energies gives an overview of the opportunities and risks in selected fast-growing countries. Download

 Online platform for renewable energy projects

We use cookies to personalise the website and offer you the greatest added value. They are, among other purposes, used to analyse visitor usage in order to improve the website for you. By using this website, you agree to their use. Further information can be found in our data privacy statement.
Deutschland Weltweit Search Menu