Projects

Short Description:

Overall goal

The Energy and Environment Partnership Trust Fund is a multi-donor clean energy financing facility targeting 15 countries in Southern and East Africa.

The Fund’s immediate objective and unifying theme is enhanced access to clean energy in the SEA region, with particular focus on supporting poor and underserved groups, through direct financing, investment facilitation, business development support, and knowledge and policy engagement.

The overall objective of the Fund is to be a driver of sustainable and inclusive green growth and climate change mitigation by supporting countries across the SEA region toward the realisation of a climate resilient, zero-carbon future and contributing to the Sustainable Development Agenda and the targets of the Paris Climate Agreement.

Expected results

The results for the next 5 years' phase of the Fund are based on an assumption of at least Euro 40 m in committed capital:

- 800.000 households, of which at least 400,000 rural, benefitting from improved energy access (improved indoor air quality; savings on energy spending; increased hours of available lighting; cost per household for improved energy access)

- 6.000 jobs created of which at least one third for women

- 400.000 tons/CO2 equivalent greenhouse gas emissions reduced or avoided

- 1,00 million MWh in total energy savings from energy efficiency investment/financial

- 100 million Euro leveraged investment, comprising 20 million Euro co-finance and 80 million Euro additional follow-on investment.

Target group / Beneficiaries

The direct beneficiaries of the Fund will be an estimated 50-60 project developers, such as receiving direct clean energy financing, investment facilitation and business development support. Additional direct beneficiaries will include the national policy makers of the 15 target countries and the regional energy sector agencies of the Southern African Development Community and the East African Community.

About 4 million individuals in the 15 target countries will directly benefit from enhanced access to energy to the activities and investments of the Fund

Activities

The Fund will focus its operations on three linked and interrelated activities:

- Clean Energy Financing supporting early-stage energy access projects;

- Investment Facilitation and Business Development Support (BDS), and

- Knowledge, Policy and Partnerships,

all with particular focus on supporting job growth and gender equality as well as underserved and vulnerable groups.

The Fund will concentrate on 15 countries in Southern and East Africa, Botswana, Burundi, Kenya, Lesotho, Namibia, Malawi, Mozambique, Rwanda, Seychelles, South Africa, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe, where EEP-SEA has strong market recognition and demonstrated impact with flexibility to expand geographic focus pending interest and funding.

The Fund will establish two primary windows for direct clean energy financing both aimed at leveraging additional investment:

- the EEP Innovation Window will target early-stage energy access projects in active development through an open challenge fund and call-for-proposal format closely following the model established under the EEP-SEA Programme and allocating financing in the form of grants and repayable grants to successful project developers;

- the EEP Catalyst Window will provide a follow-on investment window for continued financing in the form of loans, guarantees and other risk-sharing instruments for selected projects stemming from the EEP innovation window. Direct financing under the catalyst window will be limited in scope, selecting strong cases with a proven track record that are poised for scale up and able to demonstrate clear additionality for Fund resources.

The Fund will complement direct clean energy financing with targeted Investment Facilitation and Business Development Support providing technical advisory and investor outreach, recognising that access to specialised business advisory expertise and, even more crucially, access to finance beyond EEP remain critical constraints to growth for emerging businesses.

Under its third activity area, Knowledge, Policy and Partnerships, the Fund will leverage robust data gathering and portfolio monitoring and evaluation to inform an active engagement with national governments, regional institutions, donors and funders, civil society and the private sector on broader policy and development issues.

Context

Energy access is widely acknowledged as a driver for economic growth and job creation as well as advances in gender equality, health, and education. Technology developments, falling costs and improvements in efficiency are making clean energy increasingly mainstream, and the opportunity to achieve zero carbon growth is within reach.

The Energy and Environment Partnership Trust Fund is hosted and managed by the Nordic Development Fund (NDF) with implementation and coordination support provided by a competitively recruited service provider team operating from regional hubs in Pretoria and Nairobi.

Confirmed financing for the Fund currently consists of Euro 3 m from the ADC, Euro 15 m from Finland and Euro 10 m from the NDF. An additional contribution from Norway is planned.

NDF is the joint Nordic climate and development finance institution of the 5 Nordic countries: Denmark, Finland, Iceland, Norway and Sweden, and will have overall responsibility for management, administration and performance of the Fund throughout its life. NDF was established in 1989 and currently manages more than Euro 800 m in paid-in capital from its member governments with the objective of facilitating climate change investments primarily in low-income countries in Asia, Africa and Latin America.

The Fund will build upon and enhance the successes of the Energy and Environment Partnership with Southern and East Africa (EEP-SEA Programme) jointly financed by the Ministry for Foreign Affairs of Finland, the ADA and the UK Department of International Development from 2010 to 2017.

To date, the EEP-SEA Programme has channelled more than Euro 57 m to more than 200 pioneering projects leveraging innovative clean energy technologies and energy access business models to transform lives and livelihoods with particular focus on the very poor. EEP projects have improved energy access for more than 900,000 households, roughly equivalent to the population of Finland, and contributed to more than 8,000 new jobs, of which more than 3,000 accrued to women. EEP financing has also triggered direct greenhouse gas (GHG) emissions reductions of more than 1.3 m tonnes of CO2 equivalent and leveraged more than Euro 150 m in additional investment.

The Fund will ensure that this proven and effective EEP-SEA model for identifying and fast-tracking support to high-impact and innovative renewable energy and energy efficiency projects endures and stays relevant in a rapidly changing, energy financing landscape.