(Bloomberg) -- With financial backing from the U.S. government, solar developer Gigawatt Global Cooperatief UA signed a deal with the 15-nation Economic Community of West African States to build $1 billion of renewable energy projects in the region.
The U.S. is supporting the project through its Power Africa initiative set up in 2013 under President Barack Obama’s administration, a program that had pledged to invest $7 billion over five years. The advancement of this deal is an indication that the U.S. Agency for International Development has retained its ability to act even though President Donald Trump has slashed aid budgets and criticized U.S. involvement in poverty alleviation.
The deal will help build the West Africa Power Pool, which is a unit of the Economic Community of West African States, or Ecowas. It was set up to implement this agreement and create a regional electricity system. The deal builds on an agreement inked by the U.S. and Israel last year where the two governments pledged to work together to reduce energy poverty in Africa.
“Energy poverty can be eliminated even in smaller or less developed Ecowas states with the leverage of a regional strategy,” according to Yosef Abramowitz, chief executive officer of Gigawatt Global. “This deal will advance U.S. jobs, enhance the empowerment of women and deploy American soft power in a region with fragile states of interest to U.S. security.”
Abramowitz is a leading renewables developer, controlling the Dutch-registered Gigawatt Global and Energiya Global Capital. He was a co-founder of Arava Power Co. in Israel.
The memorandum of understanding calls for Gigawatt Global to finance and install 800 megawatts of solar and wind farms in West Africa, beginning with Burkina Faso, Senegal, Mali, Nigeria and the Gambia, according to Israel’s ambassador to Nigeria, Guy Feldman.
“This MOU signed today is a powerful metaphor to the West and the rest of Africa, which pave the way for future Israeli innovation,” Feldman said.
Power Africa is expected to be a lead source of funds for the projects. The developers are also hoping to bring in other development banks and investors such as the African Development Bank. The funds are intending to have a split of 70 percent debt and 30 percent equity.
Project development is planned to kick off in early 2019, including feasibility studies, training courses and the signing of power purchase agreements.
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