28 July 2021
Templars has advised a group of international finance institutions and social impact investors including EDFI Management Company SA and Oikocredit, Ecumenical Development Cooperative Society U.A. in respect of their long-term financing and investment in PowerGen Renewable Energy (a renowned on-grid and mini-grid developer in Nigeria) for the construction, development, operation and maintenance of a portfolio of mini-grids that will provide clean and reliable electricity across 25 communities in Nigeria. This is reported to be the largest mini-grid portfolio development in Nigeria.
PowerGen is developing 28 distributed renewable energy (DRE) systems across Nigeria, designed as solar PV and battery-powered mini-grids with about six of the projects already commissioned. The financing will be used to develop and commission the remaining sites in the portfolio. In addition to providing clean, reliable electricity to thousands of people in rural Nigeria, the DRE systems will also mitigate over 2,000 MT CO2 emissions annually.
The projects also received grant funding from the World Bank and the Nigeria Rural Electrification Agency’s Nigeria Electrification Project (NEP), which will provide a fixed grant for each project that PowerGen connects.
The mini-grids will be built through a special purpose vehicle which will be fully acquired by CrossBoundary Energy Access (CBEA) once the systems have met the pre-agreed technical standards. PowerGen will build the systems and continue to act as the long-term operator of the assets after the transfer to CBEA. CBEA’s ‘take-out at completion’ transaction structure allows the construction financiers to segment their investment to the construction phase, and CBEA as an asset owner to segment its investment to the long-term operations phase. This is arguably a first for mini-grids in Africa at this scale and shows how innovative financing structures can bring private capital into a sector where revenue shortfalls and perennial illiquidity have impacted fund raising.
The Templars team which advised on the structuring, documentation and negotiation of the transaction was led by Finance, Energy and Projects Partner, Desmond Ogba with support from Senior Associate, Moses Pila and Associates, Ojuolape Kalesanwo, Uba Emole, Bibiana Idabor, Jeremiah Ojo, Ilamosi Ogwemoh and Michelle Eigbobo.