Renewable energy developers across sub-Saharan Africa continue to grapple with the challenge of securing adequate financing for projects. However, innovative financing structures that do not rely on public guarantees are beginning to gain momentum.
In a significant development, Serengeti Energy, in partnership with Kwama Energy, announced on January 7 the financial close of the Ilute Solar Project in Zambia.
The project involves the development of a 32-megawatt-peak photovoltaic power plant located near Sesheke in Zambia’s Western Province. Achieving financial close clears the way for construction to begin and represents a major milestone in the project’s journey.
Ilute stands out for its unique financing and commercialization structure. The plant has been developed as an independent power producer and is anchored on a merchant power purchase agreement with GreenCo Power Services Ltd.
GreenCo operates as a regional electricity aggregator within the Southern African Power Pool, the regional power market for southern Africa. Unlike conventional power projects, Ilute does not benefit from sovereign guarantees or direct commitments from Zambia’s public utility. Instead, the project’s electricity output will be sold on the regional power market through GreenCo.
The financial close was enabled by a $26.5 million senior financing package provided by a consortium of lenders. The funding combines concessional, development, and commercial capital, with the Dutch development bank FMO serving as the mandated lead arranger.
Other lenders include the Sustainable Energy Fund for Africa, managed by the African Development Bank; EDFI Management Company through the EU-funded ElectriFI initiative; and Triodos Investment Management.
The project aligns with Zambia’s broader strategy to diversify its power generation mix. The country currently relies heavily on hydropower, leaving its electricity supply vulnerable to climate variability and drought.
By expanding solar generation and leveraging regional power trade, Zambia aims to improve energy security and resilience. Once operational, the Ilute Solar Project is expected to serve as a benchmark for future privately financed solar projects in southern Africa built on similar merchant power models.
