FMO backs Solarcentury Africa with US$80 Million financing for Southern Africa solar expansion

• FMO is formalising an US$80 million financing package to support Solarcentury Africa’s solar portfolio across Zambia, Namibia and Botswana.
• The funding supports a market based electricity trading model through the Southern African Power Pool, reducing reliance on government backed power purchase agreements.
• Around 90% of the energy generated under the committed facility is expected to benefit Zambia’s electricity grid.

The Dutch Entrepreneurial Development Bank (FMO), is formalising an US$80 million financing package to support the expansion of Solarcentury Africa Limited’s solar energy operations across Zambia, Namibia and Botswana.

The transaction marks a significant shift in Southern Africa’s energy sector by supporting a flexible, market based electricity trading model rather than traditional government guaranteed arrangements.

The financing package consists of a US$40 million committed facility and a further US$40 million uncommitted facility designed to support both operational and future solar assets across the region.

The committed US$40 million facility will be used to refinance existing solar projects in Namibia and Zambia through a mini perm debt structure aimed at strengthening local generation capacity. The additional US$40 million uncommitted facility has been earmarked for the planned 113 MW Lotsane Solar Plant in Botswana and will support future project development.

A key feature of the transaction is its support for the merchant solar model. Unlike conventional projects that depend on long term state backed power purchase agreements, Solarcentury’s assets sell electricity directly into the market through the Southern African Power Pool, enabling cross border power trading and greater market flexibility.

Solarcentury has already demonstrated the viability of this approach through the operational 25 MWp Mailo Solar Plant in Zambia and the recently commissioned 19.3 MWp Gerus Solar Farm in Namibia. Both facilities are actively supplying clean electricity into the regional market.

The investment also addresses growing concerns around energy security and climate resilience in Southern Africa. Zambia’s electricity system remains heavily dependent on hydropower and has experienced significant power shortages during periods of drought. Increasing the contribution of solar generation to the regional grid is expected to strengthen resilience against climate related disruptions.

FMO has classified the investment as 100% Green and 100% Reducing Inequality. The development finance institution estimates that approximately 90% of the electricity generated under the immediate committed facility will be delivered to Zambia, helping to improve power availability while supporting the country’s transition to a more diversified energy mix.

Author: Bryan Groenendaa