Berkeley Energy, an emerging markets-focused developer and investor in clean energy projects, has marked the first close for its new renewable energy fund at €130 million.
Berkeley is targeting a final close for Africa Renewable Energy Fund II (AREF II) at €300 million.
The firm, which also has two Asian clean energy funds, had raised €200 million for AREF I six years ago.
The new fund received commitments from Proparco, CDP, CDC Group Plc, FMO, Swedfund, Sustainable Energy Fund for Africa (managed by the African Development Bank) and the Clean Technology Fund (part of the Climate Investment Funds).
Proparco and Swedfund have committed €15 million each as limited partners to the fund. Swedfund had previously backed Berkeley Energy’s Asian fund REAF II in 2017.
Berkeley has offices across Singapore, Jakarta, Manila, Delhi, Mauritius, London and Nairobi. It had raised $200 million for its second Asian fund in 2017 and $100 million for the first Asia vehicle.
“By contributing capital in the first close of AREF II, especially when the COVID-19 pandemic has increased capital raising risks for fund managers, we hope to mobilize private capital from commercial investors in the subsequent closes,” said Maria Håkansson CEO of Swedfund.
AREF II will primarily target run-of-the-river hydro, wind and solar projects, as well as battery storage opportunities, across Sub-Saharan Africa (excluding South Africa).
Run-of-the-river hydropower is a type of technology which uses the natural downward flow of rivers and requires almost no water retention compared to large-scale hydropower that uses dams to store water. This minimizes the impact on the surrounding environment and nearby communities, while also providing a reliable supply of clean electricity to the national grid.
With strong growth population rates and rising GDP, Sub-Saharan Africa’s electricity demand is set to more than double by 2040. This would require about $100 billion investment in power sector infrastructure a year.
AREF II is looking to address this market opportunity by backing mid-sized grid-connected projects, typically between 10MW and 100MW each.
Luka Buljan, managing director of Berkeley Energy, said: “The successful first close of AREF II sends a clear sign of confidence that our hands-on, asset-first, technically orientated approach resonates with our investors and makes a material difference for the communities in which we operate.”