$30M Clean Energy Push to Transform São Tomé and Príncipe’s Power Sector, Cut Diesel Dependence

In a major step toward energy independence and sustainability, the African Development Fund has approved a $24.5 million grant package for São Tomé and Príncipe, anchoring a broader $30 million clean energy investment aimed at overhauling the island nation's electricity system and reducing its heavy reliance on costly diesel power.

The initiative—known as the Energy Transition, Efficiency, and Expansion Project (ETREEP)—is set to run from May 2026 to November 2031, and is expected to directly improve energy access and reliability for more than 200,000 citizens across both islands.

Breaking a Costly and Unreliable Energy Cycle

São Tomé and Príncipe's current energy system is heavily dependent on imported fossil fuels, which account for nearly 95% of electricity generation. This reliance has resulted in high production costs—around $0.30 per kilowatt-hour, among the highest in Africa.

The consequences are felt daily:

• Frequent power outages lasting 3–4 hours

• Disruptions to hospitals, schools, and businesses

• Energy losses exceeding 34% before electricity reaches consumers

ETREEP is designed to tackle these systemic challenges through a comprehensive, multi-component approach.

Renewable Energy at the Core

A centerpiece of the project is the construction of a 4-megawatt solar photovoltaic plant on Príncipe Island, paired with a 2 MWh battery energy storage system. This will enable the island—one of the world's biodiversity hotspots—to become fully self-sufficient on renewable energy, marking a significant milestone in small-island energy transitions.

In parallel, the project will introduce 1,000 energy-efficient LED streetlights on São Tomé Island, improving public safety while reducing electricity consumption.

Modernising Infrastructure and Expanding Access

To strengthen the national grid and improve service delivery, ETREEP will:

• Upgrade low-voltage electricity networks on Príncipe

• Modernise the national dispatch centre, enhancing system management and integration of renewables

• Install over 40,000 prepaid electricity meters, reducing losses and improving revenue collection

These interventions aim to boost billing and collection rates from 50% to 80%, while cutting non-technical losses from 34% to 20%, significantly improving the financial sustainability of the national utility, EMAE (Empresa de Água e Eletricidade).

The project will also deliver 2,000 new electricity connections, moving the country closer to its goal of universal electrification by 2030.

Economic and Social Impact

Approximately 50,000 households are expected to benefit directly from improved energy access and reliability, with broader economic gains anticipated through reduced energy costs and increased productivity.

The project is also positioned as a job creator and skills builder, particularly for young people:

• Creation of direct employment opportunities

• Green skills training for 200 youth in solar and electrical maintenance

With nearly 79% of the population under 35 and youth unemployment reaching 22.6%, these interventions are seen as critical to inclusive economic growth.

Empowering Women Through Energy Access

Reliable and cleaner energy is expected to deliver tangible benefits for women, who often bear the brunt of energy poverty. Improved lighting enhances safety, while access to stable electricity reduces household burdens and opens up new economic opportunities.

Financing and Strategic Partnerships

The African Development Fund is contributing:

• $19.02 million from its ADF-16 allocation

• $5.43 million from the Transition Support Facility

An additional $5 million in parallel financing is expected from development partners, alongside in-kind contributions from the government.

"This project is more than infrastructure. It is a statement of belief—that small island nations deserve modern, sustainable energy," said Pietro Toigo, African Development Bank Country Manager.

A Model for Small Island Energy Transitions

ETREEP is a cornerstone of São Tomé and Príncipe's National Energy Compact, which targets 50% renewable energy generation by 2030. By combining renewable energy, grid modernisation, and institutional strengthening, the project offers a scalable model for other small island developing states facing similar challenges.

Looking Ahead

As climate pressures intensify and fuel costs remain volatile, the shift toward renewable energy is not just an environmental imperative but an economic necessity.

With ETREEP, São Tomé and Príncipe is positioning itself at the forefront of small-island energy transformation—demonstrating that even the most resource-constrained nations can achieve clean, reliable, and inclusive energy systems with the right investments and partnerships.