The Sustainable Energy Fund for Africa (Sefa) is providing a major cash boost towards the launch of what is said to be the first independent power producer (IPP) renewable energy project in Cameroon.

Sefa has approved a $777,000 preparation grant to support development of the 72-megawatt (MW) solar power plant project, the African Development Bank (AfDB) has announced.

The grant to the JCM Greenquest Solar Corporation will finance environmental and social impact assessments and the cost related to the project’s technical, legal and financial advisory services.

The managing director of JCM Capital’s development group Michael Strait said: “As the first renewable energy IPP in the country, we believe this project will jump-start the development of renewables in Cameroon and attract significant investment to the clean energy sector.”

According to the AfDB, despite Cameroon’s “abundant resource potential” and availability of oil, gas hydro and solar power resources, the country’s energy access rate was only 18% in 2013, which is “very low” for Africa.

The country’s combined installed electricity generating capacity of 1,400 MW is largely based on hydropower (60%), “which fluctuates greatly during the drought season, forcing Cameroon to rely on expensive emergency thermal units”, the AfDB said.

There are infrastructure development plans to introduce larger hydropower facilities, but the AfDB said solar projects “deliver power on much shorter timelines than hydro”, which has a lead time “of less than two years, compared to four to six years for hydro”. Solar can also provide “a long-term predictable source of electricity over the next 25 years”.

“The JCM project will additionally help diversify the energy mix in the country using a renewable source, drive savings in fuel imports by reducing the need for emergency thermal units which are currently operating at maximum capacity, while at the same time lowering Cameroon’s overall carbon energy footprint,” the AfDB said.

The Cameroon government’s long-term Energy Sector Development Plan (PDSE 2030) aims for a 75% electrification rate by 2030 with the support of a variety of IPP investments.

The AfDB said the launch in March 2014 of the African Renewable Energy Fund (AREF) was another example of how private investment could be channelled to a key development sector.

AREF, a dedicated renewable energy fund focused on sub-Saharan Africa, closed on 12 March with $100 million of committed capital to support small- to medium-scale independent power producers (IPPs).

AREF will be managed by Berkeley Energy Africa Limited, a fund manager focused on developing and investing in renewable energy projects in emerging markets. The fund will target IPPs with “an ideal size” of between 5 and 50 megawatts and a commitment per project of between $10m and $30m, with the capacity to source further funding from co-investors where necessary for a larger investment.

A ministerial-level International Monetary Fund (IMF) conference in Cameroon last year was told that the creation of a “large portfolio of bankable infrastructure projects” in central Africa would trigger increased contributions from the sub-regional banking sector and the capital markets.

The World Bank’s lead financial sector specialist Arnaud Dornel told the conference (18-page / 2.72 MB PDF) that annual infrastructure needs across Africa are estimated at $93 billion, about 15% of Africa’s gross domestic product.