Press Release: UNDP to Support Seven Innovative Financial Solutions for Clean Energy in East Africa
The United Nations Development Programme (UNDP) will support the development of seven innovative financial aggregation models targeting a variety of clean energy solutions ranging from off-grid solar, mini-grids and e-mobility to clean cooking, across various East African countries.
These solutions were competitively selected as the winners of the UNDP Climate Aggregation Platform Financial Innovation Challenge, which was a global call for applications launched in July 2022 by the Climate Aggregation Platform (CAP), a UNDP initiative to promote the scale-up of financial aggregation for small-scale, low-carbon energy assets in developing countries. Funded by the Global Environment Facility, the CAP is a flagship initiative of UNDP’s Sustainable Energy Hub to support the structuring and deployment of innovative business models and financial mechanisms to accelerate energy access and the clean energy transition.
Through this innovation challenge, UNDP aims to foster the development of innovative financial aggregation structures and models that can help increase the availability and reduce the cost of financing for low-carbon energy in East Africa. And, in doing so, help close the investment gap to achieve universal energy access.
“We are excited to support the development of such innovative and pioneering financial solutions for clean energy,” said Riad Meddeb, Director of UNDP’s Sustainable Energy Hub. “Increasing energy access is critical to advance socio-economic development and progress on the Sustainable Development Goals in East Africa. 242 million people, close to half of the region’s population, do not have access to electricity. We need to think outside the box to close this gap—business-as-usual won’t do. Developing new ways of financing clean energy is critical to ensure that everyone can have access to affordable, reliable energy and the opportunities it brings.”
Distributed renewable energy solutions have been identified as the least-cost, fastest option to rapidly close the energy access gap in Africa by 2030. However, scaling these solutions requires large upfront public and private investments, which are currently lacking due to a series of barriers, including perceived investment risks.
Recent research by UNDP shows that financial aggregation holds great potential in enabling these upfront large-scale investments. It could notably help reduce the mismatch between distributed renewable energy funding needs and investor requirements, and in turn increase investments in such solutions. Yet, to date, there are few examples that have turned this potential into reality.
Financial aggregation instruments are complex, and their successful implementation depends on a favorable enabling environment. In that sense, the market is still nascent and faces a range of barriers that need to be addressed if financial aggregation is to be widely employed and scaled.
For that reason, through the CAP Financial Innovation Challenge, UNDP aims to support solutions at the design stage, so that novel financial aggregation structures and models can be developed that can lead to financially closed transactions in East Africa, in the near future.
In response to the call, UNDP received many applications from around the globe, with very diverse and interesting innovations, and targeting different energy sub-sectors and countries in East Africa – While the call for applications was open to applicants from any country, supported solutions are to be developed in view of being deployed in one or multiple developing countries in East Africa, with a special focus on the CAP’s two pilot countries, Rwanda and Uganda.
The seven solutions below were competitively selected as the winners of UNDP’s Climate Aggregation Platform Financial Innovation Challenge. Each of them involves a different approach to financial aggregation to help unlock new sources of financing for the clean energy sector, including climate finance. These target different sub-sectors, from off-grid and on-grid solar, mini-grids, productive use appliances, e-mobility to clean cooking, and could be deployed across different countries in East Africa including Rwanda, Uganda, Kenya, Tanzania, Malawi, Ethiopia, Madagascar, Mozambique.
Photo courtesy of DIVatUSAID.
Source: PV Magazine (link opens in a new window)
- Environment, Investing, Technology