Zambia’s Ilute Solar project finance model weaves together commercial, development, concessional capital

…Pioneering new model for financing Renewable Energy in Africa

Serengeti Energy and Kwama Energy, together with four impact lenders, have partnered to develop the Ilute Solar Project (Ilute), located near Sesheke in Western Zambia. This is a major step forward for renewable energy in Africa.

The project’s innovative finance model weaves together commercial, development, and concessional capital to mitigate investment risks and unlock bankability.

Lenders aim to replicate model across Africa

The four lenders, alongside Serengeti Energy, Kwama Energy, and GreenCo, aim to demonstrate a replicable model for renewable energy development in
Africa—one that blends innovation, regional cooperation, and inclusive growth.

Under the theme “Africa United”, the announcement of this landmark transaction at the Africa Energy Forum (AEF) on Thursday reflects how regional cooperation can accelerate national development.

By supporting regional power flows, Ilute strengthens Zambia’s grid resilience and creates space for new investment, infrastructure upgrades, and cleaner energy inflows—critical to resolving current power shortages.

Dutch development bank, FMO, acted as Mandated Lead Arranger for the $26.5 million debt package, consisting of a senior and a subordinated tranche.

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This 32MWp project is the first project financed power venture to supply electricity via the Southern African Power Pool (SAPP), under a market-based power purchase agreement (PPA) with GreenCo Power
Services Limited. The project’s financing structure marks a breakthrough in African project finance.

The subordinated tranche, provided by FMO and ElectriFI, has a more flexible repayment schedule, thereby acting as a buffer for price fluctuations on the SAPP market.

With this protection in place, the senior tranche is sufficiently derisked to attract a commercial lender, Triodos, alongside FMO. The senior tranche is completed by a concessional tranche from SEFA, the catalytic facility managed by the AfDB.

Ilute’s market-based PPA circumvents traditional models reliant on state utility offtake and sovereign guarantees. Instead, power will be sold under a private PPA to GreenCo, which will trade into the SAPP market.

This represents a fundamental shift in how renewable energy projects are financed in Africa, anchored in competitive power trading, regional integration, and shared risk, all without burdening government balance sheets.

What Nigeria can learn from this

A diverse group of stakeholders has come together to enable this structure: The Government of Zambia provides regulatory certainty and legal protections; the local community, led by Senior Chief Anang’anga Imwiko and the Barotse Royal Establishment, provided land and ongoing stewardship; ZESCO, Zambia’s national utility, assumes grid-related operational responsibilities and receives wheeling revenues; and investors and lenders take on electricity price volatility.

Structure mobilises private capital at scale

This structure mobilises private capital at scale, supports Zambia’s energy transition, and offers a transparent, rules-based model for power trading—one that can be adapted by other countries seeking to modernise their power sectors and attract investment.

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Positive environmental and community impact

Ilute is not only about delivering clean energy—it also prioritises environmental sustainability and local empowerment. The project includes a biodiversity plan developed in collaboration with the World Wide Fund for Nature (WWF). It allocates 1 percent of its annual revenues to a community trust, governed by local representatives, to fund locally prioritised development initiatives.

Here’re parties behind this scalable model for Africa’s Energy Future

The African Development Bank (AfDB) is Africa’s premier multilateral development finance institution, supporting economic and social progress across the continent.

Sustainable Energy Fund for Africa (SEFA) is a multi-donor Special Fund that provides catalytic finance to unlock private sector investments in renewable energy
and energy efficiency.

EDFI Management Company (EDFI MC) is a multilaterally owned impact asset manager which delivers innovative development finance solutions that enable European DFIs, development banks and private sector
investors to increase the scale and impact of their work.

The Electrification Financing Initiative (ElectriFI), managed by EDFI Management Company, is an impact-first investment facility, funded by the European Union, USAID’s Power Africa programme, the Government of Sweden and the Government of Italy. ElectriFI is investing in early-stage private companies and projects that increase or improve access to and supply of sustainable energy in developing countries.

FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs.

GreenCo has established itself as a key player in Southern Africa’s renewable energy sector with operations in Zambia, South Africa, Zimbabwe, Namibia and with recent entry to the DRC.

Through its role as a creditworthy renewable energy buyer, aggregator and trader, GreenCo enables private sector investment while simultaneously strengthening the renewable energy market across Southern Africa and improving regional energy security.

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The company aggregates power and then sells the renewable-generated power to utilities, private sector offtakers, national power trading markets, and on the SAPP. Its shareholders include Impact Fund Denmark (IFU) and InfraCo Africa, a member of the Private Infrastructure Development Group (PIDG).
Kwama Energy is an Independent Power Producer (IPP) developing wind and solar PV projects across Zambia and the Zambezi basin. Kwama brings deep local development expertise and experience in delivering world-class energy infrastructure projects. The company focuses on opportunities in liberalising regional electricity markets and on powering the critical mineral value chains, essential for the global green revolution.

Serengeti Energy is a leading renewable independent power producer specialising in the development, construction, and operation of utility-scale renewable energy plants tailored to the needs of both public and
private off-takers. The company operates nine power plants across five countries – including seven hydropower plants and two solar plants – in South Africa, Uganda, Rwanda, Malawi, and Sierra Leone.

Serengeti Energy is currently constructing its fourth hydropower facility in South Africa and has a portfolio of projects in advanced development in Senegal and Zambia.
Owned by development finance institutions such as KfW, STOA, Proparco, Norfund, Swedfund, and the Nordic Development Fund (NDF), Serengeti Energy is committed to expanding sustainable energy solutions across Africa.