SOMALIA: MIGA Issues $5m Guarantee for Baidoa Hybrid Solar Power Plant

The Multilateral Investment Guarantee Agency (MIGA) is issuing a $5.67 million guarantee to cover the risks associated with Kube Energy's investments in Somalia. The company is involved in the construction of a 2.8 MW hybrid solar power plant in Baidoa.

For the first time, the Multilateral Investment Guarantee Agency (MIGA) is supporting a project in Somalia. The subsidiary of the World Bank Group is issuing a $5.67 million guarantee to Kube Energy. The Oslo, Norway-based company has partnered with investor CrossBoundary Energy to launch Kube Energy Somalia. It is a special purpose company aiming to develop a 2.8 MW solar power plant.

The plant will be connected to a 4.8 MWh battery storage system to ensure power generation after sunset or in bad weather. The hybrid solar power plant will be built in Baidoa, a town in Bay province, in southwestern Somalia. Kube Energy Somalia has signed a power purchase agreement (PPA) with the United Nations (UN) mission there.

Electricity sold to the UN

The Miga guarantee is intended to cover Kube Energy’s capital and debt investments in Kube Energy Somalia for up to 15 years against the risks of expropriation, war and civil unrest. “MIGA’s risk exposure under the guarantee will be shared with the International Development Association (IDA) private sector window and the Renewable Energy Catalyst Trust Fund (RECTF) through a first loss mechanism that will spread risk and extend MIGA’s reach in fragile contexts,” MIGA says.

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For the record, the RECTF is a multi-donor trust fund established in 2022 and managed by MIGA with support from the Norwegian Agency for Development Cooperation (NORAD) and the Japanese government. The Kube solar power plant will be capable of producing 4,000 MWh per year, electricity to power UN facilities, as well as other international organisations, government offices and utilities.

The alternative to diesel

The use of solar power will allow the UN to reduce the environmental footprint of its operations. Kube Energy estimates that the hybrid solar power plant will reduce fuel consumption by approximately 1 million litres per year, avoiding greenhouse gas (GHG) emissions of approximately 2,800 tonnes of CO2 equivalent per year.

With the support of the local authorities, Kube plans to distribute some of the electricity produced to local people. However, the Baidoa solar power plant will be handed over to the Somali government after 15 years of commercial operation. According to the World Bank, 90% of the electricity generated in Somalia is supplied by isolated diesel-powered mini-grids.

Jean Marie Takouleu