In 2008, as the urgency of global support for climate-smart development became increasingly apparent, donor and recipient countries established the Climate Investment Funds (CIF) through the multilateral development banks as a transitory financial mechanism to help provide an interim climate source of funding, pending the effectiveness of a new multilateral climate finance facility developed under the guidance of the United Nations Framework Convention on Climate Change (UNFCCC). This multilateral climate finance facility, now operationalized, is today known as the Green Climate Fund (GCF) and is becoming the central piece in channeling resources to climate change projects and programs across the developing world. Read More
Global investment could hold the key to fighting climate change, with one trillion dollars already invested in solutions such as renewables and energy efficiency, says International Finance Corporation - Read the Full Story A solar plant with wind turbines in the background in El Bonillo, Spain. Photograph: Pablo Blazquez Dominguez/Getty Images
World Bank Board of Executive Directors approves two grants totaling US$35 million for the Renewable Energy for All project, financed by a $19.62 million grant from the Scaling-up Renewable Energy Program (SREP); and the Modern Energy Services for All project, financed by a $15.65 million grant from the Clean Technology Fund (CTF). Read the Press Release Photo: Dominic Chavez / World Bank
South Africa's KaXu Solar One project is the first large-scale concentrated solar power plant with storage developed by the private sector operating in an emerging market. The project is also a first for the town of Pofadder in the Northern Cape Province, where the plant started operating in early 2015, moving South Africa towards a clean energy future that also has the potential to bring economic development, including the creation of 4,500 temporary and 80 permanent jobs. About the Project The plant uses parabolic mirrors to reflect and concentrate the sun’s rays to produce heat, which then generates steam that powers turbines and produces electricity. Energy storage allows the plant to produce firm, base-load electricity even when the sun is not shining, offering a remarkable low-carbon solution to a growing African economy. South Africa is currently the 12th highest contributor to greenhouse gas emissions in the world because of its reliance on coal-driven power stations. This project supplies the equivalent of 80,000 homes with clean energy while offsetting 315,000 tonnes of carbon dioxide emissions a year, contributing towards South Africa's goal of generating up to 17,800 MW of renewable energy by 2030 to reduce its dependence on oil and natural gas resources. Project Financing Funding for KaXu was coordinated by the International Finance Corporation (IFC), a member of the World Bank Group, which provided direct financing of $143m for two CSP projects in SA — including KaXu Solar One — and the 50MW Khi Solar One project, the first solar tower plant on the continent. The Climate Investment Funds' Clean Technology Fund invested $42.5 million to support South Africa's sustainable energy acceleration program and to demonstrate different models of private sector participation in the energy sector. More about KaXu Solar One More about this year's Financing for Climate Friendly Investment Momentum for Change Award Winners
Morocco received approval for a US $25 million loan from the Climate Investment Funds’ Clean Technology Fund (CIF CTF) for a project to generate solar power through an innovative hybrid Concentrated Solar Power (CSP) and Photovoltaic (PV) solution.
India is emerging as a front runner in the global fight against climate change, the World Bank has said, noting that the solar power is gradually displacing coal as an energy source in the Asian country.
IFC, a member of the World Bank Group, today announced a landmark financing package of $55 million to build Mozambique’s first utility scale solar PV plant, which will help increase electricity sector climate resilience and deliver power to rural areas. It includes $19 million from IFC’s own account, $19 million from Climate Investment Funds, and a syndicated loan of up to $17 million.
Since 2008, the $8.3 billion Climate Investment Funds (CIF) has been leading efforts to empower transformations in the energy, climate resilience, transport, and forestry sectors. CIF concessional financing offers flexibility to test new business models and approaches, build track records in unproven markets, and boost investor confidence to unlock additional finance from other sources, including the private sector, governments, and the multilateral development banks (MDBs) that implement CIF-funded projects.
This year's Vienna Energy Forum had a focus on ways to contribute to the successful implementation of the Sustainable Development Goals and the Paris Agreement. The global gathering was a timely opportunity for diverse institutions and individuals to meet, discuss and highlight their respective efforts, ideas and contributions towards SDG 7 (access to affordable, reliable, sustainable and modern energy for all).
The CIF contributed to the Forum conversation with several events, highlighting projects supported through the Clean Technology Fund (CTF) and the Scaling-Up Renewable Energy Program.
May 9 - Energy Access Redefined: Emerging Findings from the Global MTF Survey
The Multi-tier Framework (MTF) heralds a shift away from the traditional, perhaps even simplistic, approach to measuring access to energy—either having access or not. By recognizing that there are nuances to energy access that a binary approach misses, the MTF method helps capture several key and informative aspects—capacity, duration, quality and reliability, affordability, and safety—as well as the impact on socioeconomic development.
In collaboration with the Energy Sector Management Assistance Program and the World Bank's Energy Global Practice, the CIF organized an engaging session where Kenya and Rwanda, the first two countries to have completed the MTF survey, shared some initial findings and lessons from the process. By looking at the multiple dimensions of access in households, business, and community facilities, the MTF captures more detailed and more accurate information about the quantity and quality of energy services received by households, as illustrated in the visual below.
May 10 - Scaling up Energy Efficiency Financing: Lessons Learned from the CIF
The Clean Technology Fund has provided more than $5 billion concessional financing to middle-income countries to scale up the demonstration, deployment, and transfer of low-carbon technologies in renewable energy, energy efficiency, and sustainable transport. Energy efficiency makes up about 15 percent of the current CTF portfolio, compared with over 70 percent for renewable energy.
Given the growing interest in this topic, it was a full house when the session opened with a new video about how Turkey is using a leasing, not lending, model to spur energy efficiency in small and medium sized enterprises.
The side event featured three case studies from CTF-financed energy efficiency projects in India, Mexico, and Turkey. Government officials and financiers from these countries presented their experiences, lessons learned and perspectives on the role of public finance in unlocking the energy efficiency market. MDB participants also shared their insights on scaling-up energy efficiency financing, including in the context of implementing climate action plans.
5 Takeaways from the Conversation
Macroeconomic drivers, such as current account deficits, can help drive supportive policies – such as favorable tax incentives - for energy efficiency. Also, export-orientated economies and sectors that rely on operational efficiency and cost-cutting can also create a fertile ground for energy efficiency financing.
Even in countries where there are low-carbon targets and supportive policies for EE financing, access to financing can be a major challenge for banks to develop EE financing lines. Often times the money is available in local capital markets, and the business models are well known for deploying these for EE, though local banks will still not choose to develop these product lines due to high perceived risk and lack of capacity.
Concessional fundscan provide the incentives necessary to help local banks develop and build-out their energy efficiency financing line of business, while also allowing development financing institutions to open the door to work with strong local financing institutions. Also, concessional funds can help decrease the perceived risk of EE products by local banks, which helps decrease financing costs for end-use customers.
Building capacity of loan officers and management from local banks and providing them with tools, such as the digitalization and standardization of energy audit process/reporting, can be critical to helping local banks understand the EE financing business and develop and market these new lines of business. Since EE and energy savings are often not the priority for end-use SME customers, 3rd party advisors can be critical to helping banks originate and disburse the initial tranche of loans for these products.
Upstream work, such as surveying potential customers in a target sector in order to evaluate appetite for EE financial products, can be critical to mitigate uncertainty regarding the development of these products. Another way to mitigate this risk for local FIs is to develop legally binding performance contracts that guarantee proper installation and operation of EE systems, as well as providing a 3rd party guarantee for the performance of these systems.
May 12 - High Level Plenary: Financing Innovative Business Models
The side event contributed to the conversation when Mafalda Duarte, Head of the CIF, chaired a panel on Financing Innovative Business Models,with business leaders from Austria, Morocco, and Namibia as well as representatives from Climate Policy Initiative, Practical Action, SADC Centre for Renewable Energy & Energy Efficiency, and the World Energy Council. The panel explored innovative, inclusive, and sustainable business models that can deliver the best use of available financial resources for the transition required to achieve access to energy that is affordable, reliable, sustainable and modern, for all.
The session rounded off the CIF's participation at VEF 2017 by asking the tough questions about how the global community can achieve a win-win through policies that help incentivize the private sector to enter low-income markets, so poor people can gain access to affordable and sustainable energy and at the same time support new energy-smart markets and supply chains.
Overall, the Forum facilitated rich conversations on a wide range of topics—from innovation in business models, to attracting private sector investment, how to finance the inevitable energy transition and more—with events of all sizes and participants from all corners of the world.