European Investment Bank backs construction of new solar plant in Burkina Faso

Out-Law News | 26 Sep 2014 | 10:28 am | 2 min. read

The European Investment Bank (EIB) has agreed to provide €23 million under a 20-year loan agreement to support investment in building “one of the largest photovoltaic power stations in sub-Saharan Africa”. 

The 30-megawatt (MW) solar plant project will be built at Zagtouli, on the outskirts of Burkina Faso’s capital Ouagadougou, at a total cost of €70.5m. The plant will be operated by national electricity utility Sonabel.

Plans for the plant come just three months after Canadian-based Windiga Energy signed an investment agreement for a separate 20 MW solar plant to be built in Zina, 200 kilometres west of Ouagadougou.

The EIB said the Zagtouli plant “is expected to act as a reference for future solar investment across the continent”. Once operational, the plant “will significantly increase power generation in Burkina Faso, reduce dependence on energy imports from Ivory Coast and Ghana and help prevent power cuts”, the EIB said.

According to the EIB, it is estimated that less than a quarter of the country’s population has access to electricity. In recent years power demand in the country has increased annually by 10%, “however power cuts and limited electricity access have seriously hindered economic growth”.

Burkina Faso’s economy and finance minister Lucien Bembamba said: “The EIB is a strong partner for Burkina Faso and this close cooperation over many years has enabled significant investment in new water and energy infrastructure that has created jobs across the country.”

EIB vice-president Pim van Ballekom said electricity was “essential for economic activity”. The EIB is “committed to supporting energy investment that will improve lives across Africa”, he said. “The significant support for the new solar farm builds on our strong partnership over many years with Sonabel. Burkina Faso can be proud to host the new facility that will act as a benchmark for renewable energy in West Africa.”

Support for the Zagtouli plant is in addition to a €25m grant that the European Union has allocated for the project. The EIB said agreement for financing the project followed detailed feasibility studies, supported by the EU, “to evaluate local energy needs and strengthen project implementation”. Alongside the EIB, “financing will also be provided by the French Development Agency and EU and over 100 jobs will be created during construction of the solar plant”, the EIB said.

The EIB is one of the world’s largest financiers of renewable energy and energy infrastructure. EIB-backed projects in recent years have included electricity interconnections across West Africa, solar power developments in South Africa and sub-Saharan Africa’s largest wind farm at Lake Turkana in Kenya.

In Burkina Faso to date, the EIB said it has provided nearly €200m for investment in energy, transport and water projects, as well as by local companies.

The $50m Windiga project is scheduled for completion at the end of 2015. Under the terms of the deal, a power purchase agreement will also be finalised for Sonabel to purchase all electricity produced by the facility for 25 years. In August 2014, the Sustainable Energy Fund for Africa (SEFA) approved a $950,000 project preparation grant for the Windiga project.

The African Development Bank said figures provided by Sonabel showed energy demand in Burkina Faso had increased at an annual rate of more than 10% over the past five years and “resulted in a widening supply gap across the country”. According to the figures, the country’s combined installed electricity generating capacity as of 2013 amounted to 247 MW, of which 215 MW was met by thermal power generation. Sonabel said hydropower in the country “has limited potential and is excessively dependent on irregular rainfall”.

Separately, the EIB and South African utility Eskom signed a €75m loan agreement in August 2014 to support completion of a 100 MW solar thermal plant in Upington, in the country’s Northern Cape province.