SEFA Invests in Zambia’s Ilute Solar Project, Setting New Model for Clean Energy

The Sustainable Energy Fund for Africa (SEFA), administered by the African Development Bank (AfDB), has committed $8 million to the 32 MWp Ilute Solar Project in Western Zambia, as part of a $26.5 million blended financing package. This strategic investment is a milestone not just for Zambia’s renewable energy ambitions, but for the broader African continent’s clean energy transition.

Announced during the Africa Energy Forum in Cape Town on 19 June, the financing agreement brings together a consortium of forward-thinking stakeholders committed to accelerating energy access, regional power integration, and climate resilience across Southern Africa.

A Landmark Project in Zambia’s Renewable Energy Journey

The Ilute Solar Project is structured as an Independent Power Producer (IPP) initiative and will deliver electricity through the Southern African Power Pool (SAPP). Power will be sold under a market-based Power Purchase Agreement (PPA) with GreenCo Power Services Ltd, a pioneering regional power trading company. This innovative financing model avoids placing pressure on Zambia’s national budget by eliminating the need for sovereign guarantees—an approach that offers a sustainable and scalable alternative for other African nations.

"SEFA is proud to be a key catalytic partner in the Ilute Solar Project," said Daniel Schroth, Director for Renewable Energy and Energy Efficiency at the African Development Bank Group. "This project exemplifies our commitment to supporting innovative solutions that accelerate Africa's energy transition. Its unique financing structure, combined with regional integration benefits, makes it a replicable model for other countries across Africa."

Other stakeholders who signed the financing agreement include Serengeti Energy, Kwama Energy, EDFI Management Company, and the Dutch entrepreneurial development bank FMO—underscoring the diverse coalition of investors and developers that have aligned to bring this project to life.

Market-Based Innovation and Regional Impact

Unlike traditional power deals that rely on government guarantees or subsidies, the Ilute Solar Project leverages a commercial PPA with a regional power trader. GreenCo’s role enables access to cross-border electricity markets and diversifies off-take risk, creating a more bankable and resilient project.

This strategy aligns closely with Zambia’s broader energy sector reforms and objectives:

• Reinforcing energy security by expanding renewable generation capacity,

• Mobilizing private investment through new financing structures,

• Modernizing the national grid through regional trading partnerships.

By contributing clean electricity to the SAPP, the project will enhance energy access and reliability across multiple Southern African nations—solidifying Zambia’s role as a regional energy hub.

Aligning with the New Deal on Energy for Africa

The Ilute Solar Project supports several flagship AfDB initiatives, including the New Deal on Energy for Africa, which aims to achieve universal access to electricity on the continent by 2030. It also aligns with the Bank’s M300 initiative, designed to develop and connect 300 private-sector-led renewable energy projects across Africa.

The project’s success could inspire similar market-based, non-sovereign-backed models in countries where fiscal space is constrained but renewable energy potential is abundant.

Community Investment and Biodiversity Commitments

In a landmark step toward inclusive and sustainable development, the project includes a biodiversity management plan developed in partnership with the World Wide Fund for Nature (WWF). A key component of this plan is the allocation of 1% of annual project revenues to a community development trust.

This trust, governed by local representatives, will fund development initiatives prioritized by local communities—ensuring that the social and economic benefits of the solar project reach the grassroots level. Initiatives may include health, education, conservation, and agricultural enhancement projects, contributing to long-term social equity in the region.

A Model for Africa’s Renewable Energy Future

The Ilute Solar Project is not just about clean energy; it represents a new template for how renewable power can be financed, operated, and integrated in Africa. By engaging private capital, promoting regional power trade, and embedding community benefits, the initiative sets a new benchmark for sustainable infrastructure development.

As Africa grapples with the twin challenges of energy poverty and climate change, projects like Ilute offer a hopeful blueprint: one that balances innovation, inclusivity, and environmental stewardship in pursuit of a greener and more connected continent.