Project detail - Hydrobox Infrastructures Sez Limited

Who is our prospective customer?

Hydrobox Infrastructures SEZ Ltd (“Hydrobox”) is a hydropower plant and mini-grid developer focused on developing small run-of river hydro mini-grids in Kenya under the Anchor, Business & Household Customer (“ABC”) model. Under this model, c. 70% of the generation will be sold to commercial and industrial clients through long-term USD contracts.

What is our funding objective?

The FMO loan will serve for the financing of a hydropower mini-grid portfolio in rural Kenya, as part of a larger facility with ElectriFi, which will provide a USD2 MLN senior debt facility. The portfolio will consist of eight hydro power plants forming five mini grids totalling 2.3MW of which two interconnected plants are already online.

Why do we want to fund this investment?

This investment aims at providing 100% renewable energy access to households and businesses in rural Kenya. Lack of proper energy access to households and businesses continues to hold back social and economic development, especially in rural Sub-Saharan Africa (SSA). FMO is additional in addressing the financing gap: the mini-grids and Energy Services Company (“ESCo”) sectors are severely underserviced due to being too early stage for commercial funding in SSA, and still reliant on grants and DFI funding. Also, FMO can provide a tenor of 10-12 years, which is not available in the market.

What is the Environmental and Social categorization rationale?

This is a category B+ project, due to risks related to the Construction Phase and potential impacts on communities. The individual hydro power projects are in micro/mini hydro category and come with small footprints. Two projects have been realised and six more are planned. Key risks are: developers' relatively limited experience with DFI standards, project environmental and social impact assessments, stakeholder support and perspectives, hydrology and climate change, competition on water (users), land take, connections to houses and businesses (transmission line), typical Construction Phase risks (like labour, OHS, workers camp, workers grievances, sub-contractor management, noise, dust, traffic, job seekers/influx management, community consultation and grievances), biodiversity and E-flow, cumulative impacts and river basin management and operational risks including flow management. Relevant IFC PS: all 1-8 except PS7 on Indigenous People, as confirmed by DD.