Mobilizing Capital for Small-Scale Clean Energy Projects and Energy Access

When faith-based agencies, financiers and clean energy/ climate change practitioners come together in the same room for a day and talk about common objectives, the conversations are lively and engaging. This was the case when nearly 70 participants from around the world joined facilitators and climate development practitioners at the “Mobilizing Capital for Small-scale Clean Energy Projects and Energy Access” workshop in mid-September 2019 in Cape Town, South Africa.

By the end of the day, common themes emerged:

  • Faith-based organizations connect communities by serving communities on the ground. These agencies are trusted resources who are well placed as “ambassadors” to facilitate dialogue around clean-energy solutions, enabling a bridge between the clean-energy programme stakeholders (government and private-sector operators) and the communities.
  • We speak different languages both literally and figuratively. Targeted and facilitated dialogue that allows for a constructive exchange of ideas and viewpoints is useful and necessary to building a more cohesive, effective and coordinated collaboration between faith-based agencies, governments and the private sector.
  • Training and capacity building within the faith community is needed: Participants called for increased training and capacity building for faith leaders on investment opportunities and interventions and expressed an interest in understanding and exploring case studies and successful examples on the ground.
  • Justice, community engagement and grounding is key: Supporting and engaging community-led solutions that are culturally appropriate and access to funding, technical assistance and support will be imperative to their success.
  • Grant funding and conventional financing are both critical: In order to address energy poverty at scale and on meaningful timelines, a combination of funding (large grants to support non-profit and civil society engagement) and financing (concessionary capital in the forms of debt and equity – e.g. capital that will accept a “below market” return) will be necessary and needs to be scaled up immediately.

Convening stakeholders is valuable: Bringing stakeholders together to work through specific initiatives and concrete actions is valuable. Cross-sector efforts, like this workshop, should be supported and funded.

The “Mobilizing Capital for Small-scale Clean Energy Projects and Energy Access” workshop was hosted by the Low Emissions Development Strategies Global Partnership (LEDS GP) Finance Working Group and funded by the German Government’s International Climate Initiative Mobilizing Investment project (IKI MI) in partnership with GreenFaith International, the Shine Campaign, and the Southern African Faith Communities Environmental Institute (SAFCEI).

The workshop was designed to empower the increasing number of religious organizations who are working to advance clean energy access globally, particularly to rural communities.  Content delivered by energy practitioners provided key insights for the faith-based agencies on where their efforts can best scale progress towards the delivery of clean, affordable and reliable energy for the millions of people who live in energy poverty. An additional motivation for many is the relationship between clean energy and climate change mitigation and sustainable development.

Photo: Alexia Kelly

PhotoVoltaic (PV) mini-grids may offer a solution to energy poverty, but the challenging commercial business model in remote regions means that local and emerging renewable energy companies struggle to finance installations and recover operation costs.  This workshop created an opportunity for faith-based organizations to broaden their understanding of this particular challenge, and identify areas for meaningful intervention.

Scaling finance to end energy poverty in Africa

During a segment in the first half of the workshop, participants engaged in a facilitated dialogue around the barriers they believe to be impeding finance from flowing into the small-scale clean energy and energy access space in emerging markets. These barriers include:

  • Real and perceived risk (by investors) due to, inter alia, immature markets and new technologies, early-stage/unproven entrepreneurs and companies, unclear and uncertain political and regulatory frameworks, and unproven market demand and off-takers (purchasers of energy) for clean energy solutions.
  • Projects are characterized by higher upfront and capital expenditures with slow payback periods, often with lower than desired return on investment.
  • Small, distributed projects can complicate deployment and add complexity and cost to operations and maintenance – particularly when serving remote and rural areas.

Local lending institutions and financiers are often unfamiliar or uncomfortable with clean energy technologies and demand interest rates for debt that make projects uneconomic.

See the full ‘Mobilizing Capital for Small-Scale Clean Energy Projects and Energy Access: Exploring the Role of Faith-based Communities in Ending Energy Poverty’ Workshop Report.

Featured Companies & Projects:

Solar Sister Nigeria

Positive Capital Partners

Mandulis Energy

Renewable Energy Performance Platform (REPP)

The Shine Campaign

Africa Mini-grid Developers Association

IKI MI – Kenya

IKI MI –  Ethiopia

The Power Partnership

Southern African Faith Communities Environmental Institute (SAFCEI)

The IKI Mobilising Investment project is funded by the International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), on the basis of a decision adopted by the German Bundestag. IKI Mobilising Investment for NDC Implementation (IKI MI) is an initiative of the Climate and Development Knowledge Network (CDKN) and Low Emission Development Strategies Global Partnership (LEDS GP) and is contracted through SouthSouthNorth (SSN).