The Board of the Green Climate Fund (GCF), world’s largest dedicated climate fund has approved the allocation of USD 50m in equity to REPP 2, a new debt fund providing an opportunity to invest in Sub-Saharan Africa’s fast-growing renewable energy market.
Climate and impact fund manager Camco is developing REPP 2 as a USD 250m fund designed to deliver significant climate, economic and gender impacts while ensuring sustainable returns for investors.
Latest research shows that approximately 590m people in Sub-Saharan Africa do not have access to electricity, with the International Energy Agency claiming USD 22bn is needed annually to deliver reliable energy access across the continent by 2030 to meet SDG7.
At the same time, Africa is facing increasing climate hazards and countries require as estimated USD 2.8tn by 2030 to implement their Nationally Determined Contributions under the Paris Agreement.
REPP 2 has been structured as a paradigm-shifting blended finance facility leveraging public, private and commercial funding to invest in small-scale and decentralised renewable energy projects in Sub-Saharan African countries.
Through its private sector approach, and a strong focus on supporting communities vulnerable to climate change, it is projected that over REPP 2’s lifetime the fund will:
- make 35-40 investments that support the development of decentralised renewable energy and strengthen the resilience of national grid infrastructure to promote economic development in Sub-Saharan Africa, particularly in Least Developed Countries
- provide 7.7m people with new or improved access to clean, reliable and affordable power across Africa, increasing economic opportunities and access to productive use of energy activities
- mitigate 12.7m tonnes of carbon dioxide equivalent in greenhouse gas emissions over projects’ lifetime
- invest USD 70m in projects aligned with 2X’s gender lens investing criteria, and
- mobilise USD 786m in third-party funding for green growth in target countries.
With its blended finance structure, REPP 2 represents an evolutionary step from the USD 120m REPP facility, which was fully funded by the UK’s Foreign, Commonwealth and Development Office (FCDO).
Today’s announcement comes after the REPP Board signed an indicative term sheet for a junior equity investment of up to USD 50m from REPP into REPP 2. The combined junior equity investments of up to USD 100m from the GCF and REPP are designed to protect capital, and to generate an appropriate level of returns to REPP 2’s commercial investors.
Ben Hugues, Investment Director at Camco, said: “REPP 2 builds on the successes and lessons from REPP to provide a new fund that will offer significant commercial investment into Africa’s renewable energy sector, underpinning the continent’s green growth potential. Drawing on Camco’s 30-year track record in renewable energy investing, REPP 2 is projected to deliver sustainable financial returns and multiple developmental, social and environmental benefits.
“We are naturally delighted at the prospect of working with the Green Climate Fund on this new venture.”
Peter Coveliers, REPP Board member and one of the founders of the REPP initiative, said: “Blended finance is instrumental in attracting private sector funds to support a clean energy transition and green growth in Africa.
“By building on the many strengths of REPP and by adopting a well-designed blended finance structure, REPP 2 has the potential to unlock significant additional investment capital to fund climate-related projects on the continent. It’s truly exciting to be part of supporting REPP 2 as it builds upon REPP’s impressive legacy of achievements.”
