African Development Bank approves $8 million for pioneering mini-grid program in Ethiopia

The African Development Bank Group’s board of directors has approved $8 million to support a groundbreaking mini-grid pilot program with potential benefits across Africa. The financing, from the Bank’s Sustainable Energy Fund for Africa (SEFA), will be provided in the form of concessional loans, grants and risk mitigation measures, and will cover up to 50% of capital expenditure for the Ethiopia Distributed Renewable Energy and Agricultural Modalities (DREAM) Program.

The DREAM project aims to test the commercial viability and effectiveness of integrating mini-grids into agribusiness operations in nine locations across Ethiopia. This first-of-its-kind approach to Africa’s mini-grid industry has been developed in partnership with the Global Energy Alliance for People and the Planet (GEAPP), which is co-financing the program, and various Ethiopian ministries, including the Ministry of Water and Energy, Ministry of Irrigation and Lowlands, Ministry of Agriculture and the Institute of Agricultural Transformation.

Successful completion of the pilot could pave the way for scaling up and replicating the model in Ethiopia and other African countries. Dr. Eng. Habtamu Itefa Geleta, Minister of Water and Energy of Ethiopia, emphasized the importance of this integrated approach. “Water, energy and food are crucial to our sustainable well-being,” he said. “The Ethiopian government is addressing the twin challenges of agricultural productivity and energy access in an integrated manner. We are delighted to partner with the African Development Bank through SEFA and other project stakeholders on this innovative DREAM pilot.”

Joseph Ng’ang’a, interim CEO of GEAPP, highlighted the dual benefits of the program. “GEAPP was created to address two of the most important challenges of our time – ending energy poverty and tackling the climate crisis through a just transition to renewable energy, and DREAM is a perfect example of this. By leveraging strategic partnerships, DREAM communities will not only receive electricity, but also reliable energy for irrigation and clean drinking water, thereby accelerating rural development for nearly 300,000 people.”

Dr. Daniel Schroth, Director of the Bank’s Renewable Energy and Energy Efficiency Group, emphasized the innovative nature of the project. “The DREAM project provides an innovative approach to addressing the water-energy-food nexus in Ethiopia. This demonstrates the importance of partnerships and the catalytic role that the Sustainable Energy Fund for Africa (SEFA) plays in attracting private sector investment in energy access.”

This initiative represents a significant step forward in integrating renewable energy solutions with agricultural productivity, potentially transforming rural development and energy access across the continent.

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