Finance |
Empowering Africa’s green future
The Green Climate Fund (GCF) Board has recently granted approval for a $50 million equity allocation to REPP 2, a new debt fund focused on catalyzing investments in the rapidly growing
renewable energy sector in Sub-Saharan Africa. REPP 2 is being developed by climate and impact fund manager Camco and is designed as a $250 million fund aiming to generate substantial climate, economic, and gender-related impacts while ensuring viable returns for investors. IWP&DC spoke to Camco’s Investment Director Ben Hugues to discover how this private debt fund is unlocking the potential of sustainable energy for a brighter, greener future across the continent
IWP&DC: Can you provide an overview of the REPP 2 initiative and its goals for renewable energy expansion in Sub-Saharan Africa? Ben Hugues: REPP 2 is a private debt fund designed to scale up support for innovative renewable energy SMEs in Sub-Saharan Africa (SSA). REPP 2 will finance and promote the growth of small to medium-sized renewable energy projects across SSA with the objectives of providing access to energy for all and mitigating greenhouse gas emissions. Through this process, REPP 2 will catalyse the growth of SSA’s smaller-scale renewable energy sector, mobilising additional public, private and commercial funding to combat climate change and increase the climate resilience of people, communities and energy infrastructure. The fund is expected to deliver 330MW of new installed capacity, reduce or avoid more than 12.7 million tCO2e of GHG emissions, provide new or improved energy access to more than 7.7 million people, improve the resilience of nearly one million beneficiaries and make USD38 million worth of energy infrastructure more resilient.
What specific challenges in the hydropower sectors is REPP 2 addressing in Sub-Saharan Africa?
REPP 2 will specifically target small and medium-scale projects of up to 25MW for solar and hydro and up to 50MW for wind. In the hydropower sector, development cycles
are generally quite long and costly and capex requirements are high, particularly in a SSA context. By providing early-stage financing, including during the development phase, REPP 2 will support the development of small-scale hydro power in the region.
Could you explain how REPP 2 plans to leverage public, private, and commercial resources for supporting small-scale and decentralized renewable energy projects – particularly hydropower - in the region? At the fund level, we’re looking to mobilise US$250 million from public and private sources in all tranches of the capital stack. At the level of investments planned to be made by REPP 2, we expect to mobilise total finance (total project costs less REPP2 investments) in excess of US$786 million.
26 | December 2023 |
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Given the limited risk appetite from private and commercial funders, especially for smaller-scale renewables where funding quantum are lower and the potential for returns relative to the level of costs are constrained, it appears unrealistic to target a significantly higher private sector leverage ratio.
How will REPP 2 support climate-vulnerable communities and contribute to bolstering the resilience of national grid infrastructure? Are there specific regions or countries where these efforts will be concentrated? The potential of REPP 2 to increase climate change resilience and adaptive capacity lies in: The use of multiple energy sources and technologies to make energy systems more climate resilient against supply disruption. For example, hybridising hydropower generation (which is often seasonally variable and may be negatively impacted by reduced rainfall due to climate change) with solar or wind generation can provide a buffer against climate variability; Decentralising and diversifying energy supply with renewable energy systems and off-grid solutions, which can provide increased energy security through the ability to localise and buffer grid-based supply disruptions; Increasing access to renewable energy in off-grid communities to provide households and businesses with solutions that help to build resilience and respond to the impacts of climate change. Such solutions include electricity provision for clinics to respond to increased illness, malnutrition, and injury; electricity provision to refugee camps that are accommodating displaced people; electricity provision to educational facilities to improve awareness and knowledge about climate change; improved access to climate information through cellular networks, radios, and internet enabling people and communities to benefit from access to climate early-warning systems for disaster risk reduction and seasonal climate information for planning and decision-making for management of crops and livestock; providing power for increased cooling need; irrigation to increase agricultural productive output; e-mobility to provide increased access to markets as well as providing improved cooking solutions to households;
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