Africa GreenCo Group (GreenCo), Serengeti Energy and Western Solar Power have signed a power purchase agreement  (PPA) for the 25-MW Ilute Solar PV Project (Ilute Solar) in western Zambia.

Ilute Solar was developed by Western Solar Power, a Zambian renewable energy developer, and Serengeti Energy, an African renewable energy independent power producer (IPP) owned by Germany’s development bank, KfW, Norwegian development funder, Norfund and Sweden’s Swedfund among other entities.

“Leveraging the competitive markets of the Southern African Power Pool (SAPP), the project adopts an innovative private sector and market-based approach to mitigate customer default risk,” Africa Oil + Gas Report wrote on December 3 citing a GreenCo release.

“Unlike the conventional practice of transferring project risk to the government, Ilute Solar will use the vast markets available through SAPP to secure project financing without the need for sovereign guarantees.”

GreenCo is an intermediary offtaker and service provider, purchasing power from renewable IPPs and selling that electricity to utilities and private sector offtakers within SAPP.

The “ground-breaking” project, GreenCo added, will serve as a testament to the "practicality and success" of an open access regime within the Zambian electricity supply industry, aligning with the legislative amendments of 2019 and "will open up new avenues" for financing renewable energy projects in Africa.

GreenCo said with a substantial direct foreign investment of $37mn, Ilute Solar introduces “distinctive” financing structures aimed at diversifying Zambia’s energy sources.

Dutch development bank FMO and the Sustainable Energy Fund for Africa, a multi-donor fund that is managed by the African Development Bank (AfDB) are the envisaged senior lenders progressing on their due diligence of the project.