Cygnum Capital, formerly Lion’s Head Group, has signed its first transaction in the mini-grids sector, providing US$7.5 million of debt to MySol Grid Zambia (formerly PowerCorner Zambia), a unit of ENGIE Energy Access, to construct 60 mini-grids which will connect over 40,000 people to electricity in Zambia.
Cygnum Capital executed the transaction via its Facility for Energy Inclusion (FEI). The transaction provides MySol Grid Zambia with the necessary funding to construct mini-grids under the Increased Access to Electricity and Renewable Energy Production (IAEREP) programme.
MySol Grid Zambia will construct, own, operate, and maintain the mini-grids and ensure that its residential, commercial, and productive use customers receive clean, reliable electricity while for smooth delivery of the customer centric services.
“Small scale renewable infrastructure and mini-grids are fundamental in driving economic and social development across Africa,” said Carmen de Castro, Fund Manager at Cygnum Capital Asset Management.
“This inaugural transaction in the mini-grid sector demonstrates FEI’s commitment to improving energy access and supporting transactions with high development impact designing innovative structures with a commercial approach,” added de Castro.
According to ENGIE, the parent company of MySol Grid Zambia, there is huge value in the development of the mini-grid business in Zambia. The closed debt financing transaction will enable it to expand energy access to grid-unserved communities, whilst creating economic growth and increasing socio-economic welfare in the community.
“Attracting non-recourse long-term debt financing for mini-grid projects is proof of the viability of the business model and the legitimacy of renewable mini-grid projects in the rural electrification landscape,” said Gillian-Alexandre Huart, CEO of ENGIE Energy Access.
“This financing will contribute to the Sustainable Development Goals of the United Nation by providing almost 5 MW of affordable, reliable, and sustainable clean energy to more than 40,000 beneficiaries living in rural areas in Zambia” concluded Huart.