The German development finance institution DEG is investing €50 million ($52.4 million) into the Facility for Energy Inclusion (FEI), a renewable energy fund dedicated to expanding small-scale decentralized renewable energy (DRE) projects across Africa. DEG made the investment last month.
Managed by Cygnum Capital, FEI offers essential financing to small-scale independent power producers. The investment by DEG into FEI highlights the increasing focus on distributed generation as a key solution to tackle energy shortages and accelerate the continent’s transition to cleaner energy sources.
DRE projects span various technologies, such as mini-grids, solar systems for commercial and industrial users, and small-scale independent power plants (IPPs) with capacities of up to 25MW. This decentralised model is particularly effective in delivering energy to underserved communities and businesses that fall outside the coverage of national grids.
“This collaboration with DEG demonstrates strong trust in Cygnum Capital’s expertise as a leading fund manager. This is a significant achievement for FEI cementing its position as a leading lender in the DRE market in Africa with over USD 370 million cumulative commitments across 23 countries to date,” said Carmen de Castro, Managing Director at Cygnum Capital Asset Management.
Renewable energy fund to develop DRE market
According to Cygnum Capital, DEG’s investment into its renewable energy fund FEI will enable it to scale its impact by financing projects that expand energy access, reduce reliance on fossil fuels, and contribute to Africa’s energy transition.
Additionally, the investment will support the growth of the developing decentralized renewable energy (DRE) market. Across many African countries, unreliable and costly electricity has led to frequent power outages and dependence on fossil fuel backup generators. FEI aims to help reduce reliance on these high-emission energy sources, enhance access, affordability, and improve reliability of electricity supply.
“DEG is delighted to strengthen its relationship with Cygnum Capital, an experienced impact manager. This is our second cooperation within a year. We both share the commitment to foster high development and climate impact. By providing long term capital for the Facility for Energy Inclusion, DEG will support the expansion of renewable energies in Africa – an investment fitting in very well with DEG’s strategy,” said Monika Beck, Member of the DEG-Management Board.
