African Clean Energy Fund Plans to Double Financing to $2.5 Billion

The African Development Bank's clean energy fund is set to more than double its financing to $2.5 billion over the next two years as investor confidence in African renewable energy projects grows. Despite approving fewer projects in 2025, the fund received increased contributions totaling $88 million, primarily from European Union nations.

NAIROBI, Kenya (AP) — Africa’s premier clean energy financing initiative aims to expand its funding to $2.5 billion within the coming two years, reflecting growing support for the continent’s shift toward renewable energy sources.

The African Development Bank’s Sustainable Energy Fund for Africa (SEFA) saw increased donor support in 2025, demonstrating strengthened confidence among investors in Africa’s renewable energy sector. Throughout its existence, the program has generated approximately $1 billion in private sector investment alongside its direct funding commitments.

“Based on our projects pipeline, we projected capital mobilization to climb to $2.5 billion,” said Joao Duarte Cunha, manager of the bank’s Renewable Energy Funds Division and the Sustainable Energy Fund for Africa.

“By 2030, we expect our portfolio to yield over $10 billion in commercial capital mobilized,” he said.

SEFA’s funding increased to $88 million in 2025, with most contributions coming from nations within the European Union. This represented a significant jump from the previous year’s $54.3 million, according to announcements made during the regional development bank’s recent governing council session.

“SEFA is proving its catalytic value on the ground, with accelerated approvals and disbursements and growing impact,” said Kevin Kariuki, vice president for Power, Energy, Climate and Green Growth at the African Development Bank Group.

The development bank gave approval to 13 renewable energy initiatives in 2025 totaling $97 million in value, a slight decrease from 14 projects worth $108 million approved during the previous year.

“The last two years have been among our strongest, with 27 projects approved — also broadly comparable in funding volumes and significantly higher than earlier years,” said Cunha.

“Demand for catalytic financing and upstream support continues to grow, and we remain deeply committed to driving the energy transition and achieving universal energy access by 2030,” he said.

At the recent COP 30 international climate conference held in Brazil, Germany pledged $40.1 million to advance SEFA’s objectives of widespread energy access and green hydrogen development programs. Italy also announced its commitment of $5.9 million to the initiative.

The fund operates with the primary purpose of drawing private sector investment into clean energy development throughout Africa. With Denmark serving as a leading contributor, SEFA has accumulated total donations of $577 million since inception. The program offers reduced-rate financing and technical expertise to broaden energy availability and promote sustainable growth.

During 2024, SEFA gave the green light to 14 renewable energy ventures across Kenya, Nigeria, Burkina Faso, Ethiopia and Chad, contributing roughly 840 megawatts of power generation capability and establishing 1.5 million new electrical connections. Among these initiatives, eight focused on green baseload power generation — the essential minimum energy output needed to satisfy national demand. Two projects involved green mini-grid systems, while four concentrated on energy efficiency improvements.

Throughout 2025, the majority of approved ventures also emphasized green baseload generation, with reduced focus on mini-grid and efficiency programs. In December, SEFA authorized a $10 million loan to Hyphen Hydrogen Energy, a renewable energy company developing hydrogen and ammonia production facilities in Namibia. The fund also supplied an $8.14 million guarantee for an Ivory Coast social currency bond intended to finance 400,000 new electrical connections before year’s end.

In addition to large-scale utility projects, SEFA is directing investment toward distributed energy systems, including mini-grid developers and private equity and debt funds specializing in localized energy generation from smaller-scale sources.

“We are actively testing new product lines for clean cooking and for financing through commercial banks. There is real and meaningful innovation happening in this space,” Cunha said.