• Serengeti Energy reached financial close on the 32-MWp Ilute solar project in western Zambia.
• The project relies on a merchant power purchase agreement without sovereign guarantees.
• A $26.5 million senior debt package backs construction and sets a precedent for private solar deals.

Across sub-Saharan Africa, developers continue to face challenges in mobilizing sufficient financing for renewable energy projects. However, new financing structures without public guarantees are beginning to emerge and gain traction.

In partnership with Kwama Energy, renewable energy developer Serengeti Energy announced on Jan. 7, the financial close of the Ilute solar project.

The project consists of a 32-megawatt-peak photovoltaic power plant located near Sesheke in Zambia’s Western Province.

This milestone enables the start of construction and marks a significant step forward in the project’s development.

The Ilute project stands out for its financing and commercialization structure. Developers structured the plant as an independent power producer and anchored the project on a merchant power purchase agreement with GreenCo Power Services Ltd.

GreenCo operates as a regional electricity aggregator within the Southern African Power Pool, the regional power market for southern Africa. Unlike traditional models, the project does not benefit from sovereign guarantees or direct commitments from Zambia’s public utility.

Instead, developers plan to sell the electricity output on the regional market through GreenCo.

A $26.5 million senior financing package enabled the project’s financial close. A consortium of lenders provided the funding by combining concessional, development and commercial capital. The Dutch development bank FMO acted as the mandated lead arranger.

The lender group also included the Sustainable Energy Fund for Africa, managed by the African Development Bank, EDFI Management Company through the EU-funded ElectriFI initiative, and Triodos Investment Management.

The project aligns with Zambia’s strategy to diversify its power generation mix. The country relies heavily on hydropower, a dependence that exposes electricity supply to climate variability and drought risk.

By expanding solar capacity and leveraging regional power trade, Zambia aims to strengthen supply security. Once operational, Ilute could serve as a benchmark for future private solar projects in southern Africa built on similar merchant models, according to the project’s promoters.

This article was initially published in French by Abdoullah Diop

Adapted in English by Ange Jason Quenum