ADDIS ABABA, Ethiopia (XOL Africa) — The African Development Bank Group has approved a $2 million reimbursable grant to support the development of renewable energy mini-grids in Ethiopia aimed at expanding rural electricity access while boosting agricultural production.
The funding, provided through the Bank’s Sustainable Energy Fund for Africa (SEFA), will support two mini-grid projects under the Distributed Renewable Energy and Agriculture Modalities (DREAM) programme, an initiative designed to combine clean energy access with productive agricultural activities.
The projects, known as Lelicho and Murche mini-grids, are being developed by RVE.SOL ETH Energy Generation Solutions PLC and will receive financing covering up to 50% of their capital expenditure.
The approval, granted on July 17, forms part of an $8 million programmatic financing package for DREAM approved in May 2024. The programme was developed in partnership with the Ethiopian government, the Global Energy Alliance for People and Planet (GEAPP) and other stakeholders.
DREAM aims to address the connection between water, energy and food security by creating a commercially viable rural electrification model that links renewable energy mini-grids with agricultural demand.
The programme uses an “ABC model” — Anchor loads, Business demand and Community connections — to improve project viability, strengthen revenue streams and encourage private-sector investment in underserved rural areas.
“Water, energy and food security are deeply interconnected and fundamental to Ethiopia’s sustainable development,” said Habtamu Itefa Geleta, Ethiopia’s Minister of Water and Energy.
“Through DREAM, Ethiopia is pioneering an integrated approach that combines renewable energy access with irrigation and agricultural productivity. We are pleased to partner with the African Development Bank and other stakeholders to advance this innovative initiative and ensure the DREAM becomes a reality.”
The African Development Bank said the project demonstrates how concessional financing and partnerships can unlock private investment in rural energy markets.
“DREAM demonstrates how innovative partnerships and catalytic concessional finance can unlock private-sector investment in underserved markets,” said Daniel Schroth, the Bank’s Director for Renewable Energy and Energy Efficiency.
He described the programme as a scalable model that combines energy access, agricultural productivity and climate resilience, helping communities use electricity as a driver of employment, improved livelihoods and economic growth.
Carol Koech, Vice President for Africa at GEAPP, said integrating renewable energy with agricultural systems could accelerate rural development across the continent.
“DREAM is the kind of integrated solution needed to accelerate sustainable rural development,” Koech said.
“When renewable energy is paired with irrigation, market access and financial tools, it powers opportunity, strengthens livelihoods and helps infrastructure become economically viable for rural communities.”
SEFA is a multi-donor special fund managed by the African Development Bank that provides technical assistance and concessional financing to support renewable energy and energy efficiency projects across Africa.
The fund aims to remove investment barriers, strengthen project pipelines and improve the financial attractiveness of clean energy projects, supporting efforts to achieve universal access to affordable, reliable and sustainable energy under Sustainable Development Goal 7 and the continent’s Mission 300 energy access initiative.
