In a major step forward for renewable energy in Africa, Serengeti Energy and Kwama Energy, together with four impact lenders, have partnered to develop the Ilute Solar Project (Ilute), located near Sesheke in Western Zambia. This 32MWp project is the first project financed power venture to supply electricity via the Southern African Power Pool (SAPP), under a market-based power purchase agreement (PPA) with GreenCo Power Services Ltd.
Innovative Financing Structure Mitigating SAPP Price Risk
The project’s financing structure marks a breakthrough in African project finance. Dutch development bank FMO acted as Mandated Lead Arranger for the US$26.5 million debt package, consisting of a senior and a subordinated tranche. The subordinated tranche, provided by FMO and ElectriFI, has a more flexible repayment schedule, thereby acting as a buffer for price fluctuations on the SAPP market. With this protection in place, the senior tranche is sufficiently derisked to attract a commercial lender, Triodos, alongside FMO. The senior tranche is completed by a concessional tranche from SEFA, the catalytic facility managed by the AfDB.
This innovative finance model weaves together commercial, development, and concessional capital to mitigate investment risks and unlock bankability.
Redefining Power Markets – With Zambia at the Centre
Ilute’s market-based PPA circumvents traditional models reliant on state utility offtake and sovereign guarantees. Instead, power will be sold under a private PPA to GreenCo, which will trade into the SAPP market. This represents a fundamental shift in how renewable energy projects are financed in Africa—anchored in competitive power trading, regional integration, and shared risk, all without burdening government balance sheets. Under the theme “Africa United”, the announcement of this landmark transaction at the Africa Energy Forum reflects how regional cooperation can accelerate national development. By supporting regional power flows, Ilute strengthens Zambia’s grid resilience and creates space for new investment, infrastructure upgrades, and cleaner energy inflows—critical to resolving current power shortages.
Stakeholders Enabling a Replicable Model
A diverse group of stakeholders has come together to enable this structure:
- The Government of Zambia provides regulatory certainty and legal protections;
- The local community, led by Senior Chief Anang'anga Imwiko and the Barotse Royal Establishment, provided land and ongoing stewardship;
- ZESCO, Zambia’s national utility, assumes grid-related operational responsibilities and receives wheeling revenues; and
- Investors and lenders take on electricity price volatility.
This structure mobilizes private capital at scale, supports Zambia’s energy transition, and offers a transparent, rules-based model for power trading—one that can be adapted by other countries seeking to modernize their power sectors and attract investment.
Positive Environmental and Community Impact
Ilute is not only about delivering clean energy—it also prioritizes environmental sustainability and local empowerment. The project includes a biodiversity plan developed in collaboration with the World Wide Fund for Nature (WWF). It allocates 1% of its annual revenues to a community trust, governed by local representatives, to fund locally prioritized development initiatives.
A Scalable Model for Africa’s Energy Future
The four lenders, alongside Serengeti Energy, Kwama Energy, and GreenCo, aim to demonstrate a replicable model for renewable energy development in Africa—one that blends innovation, regional cooperation, and inclusive growth.
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About the African Development Bank
The African Development Bank (AfDB) is Africa’s premier multilateral development finance institution, supporting economic and social progress across the continent. Burundi is a member of the AfDB Group and a featured country under the Mission 300 initiative, which AfDB co-leads with the World Bank. The Bank’s support includes strategic co-financing and technical assistance to unlock public and private capital for energy access, infrastructure, and inclusive growth.
About EDFI Management Company
EDFI Management Company (EDFI MC) is a multilaterally owned impact asset manager which delivers innovative development finance solutions that enable European DFIs, development banks and private sector investors to increase the scale and impact of their work. The company focuses on business models, technologies and geographies where other investors have not been able to operate at the desired scale given their resources and investment criteria. For more information, visit www.edfimc.eu.
About the Electrification Financing Initiative – ElectriFI
Managed by EDFI Management Company, ElectriFI is an impact-first investment facility, funded by the European Union, USAID’s Power Africa programme, the Government of Sweden and the Government of Italy. ElectriFI is investing in early-stage private companies and projects that increase or improve access to and supply of sustainable energy in developing countries. For more information, visit www.electrifi.eu
About FMO
FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50+ year proven track-record in empowering entrepreneurs to make local economies more inclusive, productive, resilient and sustainable. FMO focuses on three sectors that have high development impact: Agribusiness, Food & Forestry, Energy, and Financial Institutions. With a total committed portfolio of EUR ~15 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally. For more information: please visit www.fmo.nl
About GreenCo
GreenCo has established itself as a key player in Southern Africa’s renewable energy sector with operations in Zambia, South Africa, Zimbabwe, Namibia and with recent entry to the DRC. Through its role as a creditworthy renewable energy buyer, aggregator and trader, GreenCo enables private sector investment, while simultaneously strengthening the renewable energy market across Southern Africa and improving regional energy security. The company aggregates power and then sells the renewable-generated power to utilities, private sector offtakers, national power trading markets, and on the SAPP. Its shareholders include Impact Fund Denmark (IFU) and InfraCo Africa, a member of the Private Infrastructure Development Group (PIDG). For more information please see: https://africagreenco.com/
About Kwama Energy
Kwama Energy is an Independent Power Producer (IPP) developing wind and solar PV projects across Zambia and the Zambezi basin. Kwama brings deep local development expertise and experience in delivering world-class energy infrastructure projects. The company focuses on opportunities in liberalising regional electricity markets and on powering the critical mineral value chains, essential for the global green revolution.
About Serengeti Energy
Serengeti Energy is a leading renewable independent power producer specializing in the development, construction, and operation of utility-scale renewable energy plants tailored to the needs of both public and private off-takers. The company operates nine power plants across five countries - including seven hydropower plants and two solar plants - in South Africa, Uganda, Rwanda, Malawi, and Sierra Leone. Serengeti Energy is currently constructing its fourth hydropower facility in South Africa and has a portfolio of projects in advanced development in Senegal and Zambia. Owned by development finance institutions such as KfW, STOA, Proparco, Norfund, Swedfund, and the Nordic Development Fund (NDF), Serengeti Energy is committed to expanding sustainable energy solutions across Africa. For further details, visit our website at www.serengeti.energy or visit us on LinkedIn.
About the Sustainable Energy Fund for Africa
SEFA is a multi-donor Special Fund that provides catalytic finance to unlock private sector investments in renewable energy and energy efficiency. SEFA offers technical assistance and concessional finance instruments to remove market barriers, build a more robust pipeline of projects and improve the risk-return profile of individual investments. The Fund’s overarching goal is to contribute to universal access to affordable, reliable, sustainable, and modern energy services for all in Africa, in line with the New Deal on Energy for Africa and the M300.
About Triodos Investment Management
For more than 30 years, Triodos Investment Management (Triodos IM) has been connecting investors who want to put their money towards lasting, positive change with innovative entrepreneurs and sustainable companies that are doing just that. In this way, Triodos IM acts as a catalyst in those sectors that play a key role in the transition to a fairer, more sustainable and more humane world. Triodos IM’s investment activities focus on five interconnected transition themes: Food, Energy, Resource, Societal and Wellbeing. Its mission as a financial player is to enable and accelerate these essential transitions. Assets under management at the end of 2024: EUR 5.8 billion. Triodos IM is a wholly owned subsidiary of Triodos Bank and a globally active impact investor. For more information, visit www.triodos-im.com
