MIGA Provides Cover for 2.8MW SolarPV/Battery Hybrid Plant in Somalia

  • The Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group has issued a guarantee of $5.67 million to cover Kube Energy’s equity and debt investments in Kube Energy Somalia LLC for a period of up to 15 years against the risks of expropriation and war and civil disturbance.
  • This is MIGA’s first project in Somalia, which became a MIGA member country in March 2020.    

The project, developed by Kube Energy in collaboration with the government of the South West State of Somalia, and financed and further developed in partnership with CrossBoundary Energy, will establish the first hybrid solar power plant in Baidoa, Somalia.

The power plant will have a capacity of approximately 2.8 megawatts of solar PV modules and 4.8 megawatt-hours of battery storage integrated with synchronized generators. The project aims to increase energy access, reduce greenhouse gas emissions, and build clean power generation capacity for the city of Baidoa, an important regional trading hub with a growing population of people displaced due to conflict and drought.

While it will serve a limited number of off-takers initially, including the United Nations, the intention is that the plant will form part of Baidoa’s permanent energy infrastructure and increase access to clean and affordable power for local government, and through a potential future expansion to businesses and residents. The project will also benefit Baidoa’s residents as most of the workforce will be recruited locally for the construction, operations, and maintenance, building local technical capacity and an ecosystem around renewable energy, with ownership of the plant to be transferred to local authorities after 15 years of commercial operations. In addition, the reduction of greenhouse gas emissions will contribute to improving the quality of the environment in a region which is severely affected by climate change.

The Somali energy sector is one of the most underdeveloped in the region, with electrification rates estimated at 35 percent

This ground-breaking business model demonstrates that renewable energy investment can be achieved even in the most challenging environments. Kube Energy’s model, leveraging creditworthy international organizations to allow investment in renewable energy-based electricity in fragile and conflict-affected countries, has a strong potential for replication. Kube Energy is pursuing similar projects elsewhere in Somalia, the Central African Republic, Mali, and South Sudan.

The plant is expected to generate an estimated gross electricity production of 4,000 MWh of electricity per year, of which approximately 90 percent would be provided by the solar array. The electricity will be supplied to the UN operation and potentially to other international organizations and government offices and public services, once power purchase agreements are signed. There is potential to expand the capacity of the plant and distribute electricity to communities across the city through a local utility company.

MIGA’s risk exposure under the guarantee will be shared with the IDA Private Sector Window and the Renewable Energy Catalyst Trust Fund  (RECTF) via a first loss facility that will assist in spreading the risk and expanding MIGA’s reach in fragile contexts. The RECTF is a multi-donor trust fund managed by MIGA that was set up in 2022 through the support of the Norwegian Agency for Development Cooperation (Norad) and the Government of Japan. This transaction is the second MIGA-guaranteed project to benefit from RECTF support.

Author: Bryan Groenendaal

Leave A Reply

About Author

Green Building Africa promotes the need for net carbon zero buildings and cities in Africa. We are fiercely independent and encourage outlying thinkers to contribute to the #netcarbonzero movement. Climate change is upon us and now is the time to react in a more diverse and broader approach to sustainability in the built environment. We challenge architects, property developers, urban planners, renewable energy professionals and green building specialists. We also challenge the funding houses and regulators and the role they play in facilitating investment into green projects. Lastly, we explore and investigate new technology and real-time data to speed up the journey in realising a net carbon zero environment for our children.