AfDB Approves $24.5m Grant to Drive Clean Energy Transition in São Tomé and Príncipe

The African Development Bank Group (AfDB) has approved a $24.5 million grant to support a major clean energy project in São Tomé and Príncipe, aimed at reducing reliance on diesel power and improving electricity access.

The funding, provided through the African Development Fund, anchors a broader $30 million investment under the Energy Transition, Efficiency, and Expansion Project, scheduled to run from May 2026 to November 2031.

The project is designed to support the country’s National Energy Compact, which targets universal electrification and a 50 per cent renewable energy share by 2030.

Currently, about 95 per cent of electricity generation in São Tomé and Príncipe depends on imported fossil fuels, with production costs estimated at $0.30 per kilowatt-hour, among the highest on the continent.

Frequent outages lasting up to four hours daily and system losses exceeding 34 per cent have continued to disrupt economic and social activities.

Under the initiative, a 4-megawatt solar photovoltaic plant, supported by a 2MWh battery energy storage system, will be constructed on Príncipe Island to enable full reliance on renewable energy.

The project will also deploy 1,000 energy-efficient LED streetlights and rehabilitate low-voltage distribution networks to improve supply reliability.

In addition, more than 40,000 prepaid electricity meters will be installed across both islands to enhance revenue collection and reduce commercial losses, while the national dispatch centre will be upgraded to better manage renewable energy integration.

The programme will directly benefit about 50,000 households and create 2,000 new electricity connections, with billing efficiency expected to improve significantly.

System losses are projected to decline from 34 per cent to 20 per cent, easing pressure on public finances.

The initiative also includes institutional capacity building for Empresa de Água e Eletricidade and the Ministry of Infrastructure and Natural Resources to ensure long-term sustainability of reforms.

The AfDB is contributing $19.02 million from its ADF-16 allocation and $5.43 million through its Transition Support Facility, with additional financing expected from development partners.

According to Pietro Toigo, the project represents a significant step towards delivering modern, reliable and sustainable energy for small island economies.