Partnering to Bring Solar Energy to the Sahel: The Djermaya Solar Project in Chad
Power Africa’s partnership with the African Development Bank (AfDB) includes collaboration on AfDB’s Desert to Power initiative, focused on the Sahel region countries of Burkina Faso, Chad, Djibouti, Eritrea, Ethiopia, Mali, Mauritania, Niger, Nigeria, Senegal, and Sudan.
Desert to Power aims to connect 250 million people to electricity, generate up to 10 gigawatts (GW) of solar energy capacity, and make the Sahel one of the world’s largest solar production zone.
In Chad, Power Africa transaction advisory and technical assistance helped secure a $20.6 million (€18 million) loan to bring the 42 MW Djermaya Solar project to financial close. Djermaya’s generation capacity consists of 34 MW of solar and an additional 8 MW-equivalent (4 MWh) in a battery energy storage system (BESS), one of the largest in the region.
Once online in 2023, Djermaya is expected to power 60,000 households, reduce the cost of electricity generation, and improve access to cleaner energy. Power Africa’s guidance to AfDB on tariff approaches will enable the Djermaya plant to produce electricity at a cost that is 40 percent less than existing sources.
The Djermaya project will also partially replace heavy fuel thermal generation in Chad, reducing greenhouse gas emissions by about 38,000 tCO2 equivalent per year.
Power Africa also helped secure $2 million in grant funding to strengthen the capacity of Chad’s national electricity utility, SNE, as the off-taker on photovoltaic (PV) and battery energy storage system (BESS) technologies and on dispatch management and commissioning support.
The successful financial close of the Djermaya project illustrates Power Africa’s critical role in paving the way for substantial investment in Africa’s energy sector.
“Power Africa’s assistance has been key for the Djermaya Solar project and instrumental in helping us every step of the way,” Gilles Vaes, CEO, InfraCo, project sponsor.
Djermaya is the first independent power producer in Chad, as well as the first and largest utility-scale PV project in the region to integrate renewable power into the national grid and to incorporate a utility-scale BESS allowing for reliable intermittent power integration and limited storage. It is also the first project in the francophone region, under civil law, to use a put and call option agreement (PCOA) to secure government repurchase of the project in case of default. The PCOA is an innovative tool utilized by Power Africa transaction advisors to unblock power projects in countries across the continent.
Power Africa assisted AfDB in negotiating project contracts and financing documents, and in incorporating grants from several partners, including the European Union and AfDB’s Sustainable Energy Fund for Africa, into the transaction. These grants will fund long-term technical assistance for SNE and the government for grid integration of the PV plant, as well as legal and technical transaction support.
Several additional Power Africa partners are key contributors to the Djermaya project, including two Private Infrastructure Development Group companies (InfraCo Africa, project sponsor; Emerging Africa Infrastructure Fund, lender), Proparco (a subsidiary of France’s development agency), and AfDB.
The Djermaya project is another example of Power Africa’s contribution to the West Africa region, turning a uniquely structured idea into a bankable transaction. The success of the project is a testament to the partners’ political will, their resilience, and their ability to sustain the interest of numerous stakeholders (including sponsors, government authorities, lenders, and contractors) throughout the process.
More than 200 people will be employed during the construction phase, set to begin in early 2022, and 30 people during the operations phase of the 20-year power purchase agreement (PPA).