InfraCo Africa increases its commitment to Berkeley on Ethiopia deal
InfraCo Africa has signed a shareholders agreement with Berkeley Energy, committing $30m of equity investment to the Corbetti Geothermal project, doubling its original commitment of $15m.
Alex Katon, Executive Director, InfraCo Africa, said: “The $30m commitment to Corbetti is truly a landmark deal for us, being our first in geothermal and in Ethiopia and the largest single commitment we have made to date.”
“It is also the first substantial equity commitment under our expanded investment strategy, which enables us to optimise our development impact in projects, while ensuring best practice through construction into commercial operations,” he added.
In 2015, InfraCo Africa formed a joint venture company with Berkeley Energy to jointly become the majority shareholder in Corbetti Geothermal.
At the time, InfraCo Africa committed up to $15m to the project, with $5m for early-stage site development and project contracts and up to $10m for the equity financing of the exploration drilling.
To mitigate the higher risks of a greenfield site, proving a new geothermal resource and being the first privately financed IPP in Ethiopia, Corbetti will be developed in multiple phases.
InfraCo Africa’s increased commitment provides the project with $25m equity finance and $5m as standby equity.
This will contribute around 20% of the funding required to start construction of exploration drilling wells this year and 10-20MW pilot power plant the following year.
It is anticipated that the power plant will provide first power to Ethiopia’s national grid by early 2020.
As well as public risk capital, InfraCo Africa brings project management and geothermal expertise to the project.
InfraCo Africa’s Tim Jackson, an experienced geothermal developer, has been instrumental in bringing international expertise to the geothermal peer review group, which will help to better understand the geoscience data and optimise well drilling locations.
As Ethiopia’s first private geothermal project, Corbetti partnered with Ethiopia Electric Power (EEP) and the Government of Ethiopia (GoE) with all parties working to draft the regulatory frameworks and legislation required to unlock geothermal potential in the country.
The project also drew on Donor support to engage the East Africa Geothermal Energy Facility (EAGER) in this process. This has benefited, not only Corbetti but also other local geothermal projects, for example Tulu Moye, with both projects signing Power Purchase Agreements on December 19 last year.
The impact is substantial: the Ministry of Water and Energy forecasts an increase in geothermal generation from 7MW in 2012, to over 1000MW by 2030.
Brian Count, Chair, InfraCo Africa, said: “With support of our donors, we are delighted to be able to substantially increase our commitment to the Corbetti project, enabling it to raise the finance needed to commence the first phase of drilling. As the first IPP of its kind in Ethiopia, Corbetti will generate the clean baseload power that is essential to alleviating poverty in a sustainable manner, attracting foreign investment and facilitating Ethiopia’s economic development.” Source: Africa Global Funds