Breaking the risk barrier for institutional investment in clean energy in emerging markets

Background

Institutional investors such as pension funds, insurance companies, and savings and investment banks play an important role in defining sustainability criteria. To date, the perceived high risks associated with the emerging markets, with renewable energy and with small- and medium-sized enterprises have all tended to steer institutional investors away from funding these types of projects. Yet progressive pension funds in Europe and the US are looking for innovative ways to structure such investments.

Purpose

To attract institutional financing for renewable energy and energy efficiency enterprises in the emerging markets by developing risk mitigation strategies and financing products through intermediaries such as E+Co. 

Main Activities

  • Work with pension funds, insurance companies and banks to analyze the risk profile of an intermediary like E+Co with a large RE/EE loan portfolio in developing countries.
  • Identify barriers to investment in E+Co when applying currently used investment approaches, define risks and identify possible mitigation measures.
  • Develop a risk analysis framework and mitigation mechanisms for the financing risk of emerging market clean energy investments for institutional investors.

Expected Impact

  • Significant increases in capital made available for financing RE/EE enterprises in developing countries
  • E+Co is able to attract capital from institutional investors to finance its pipeline of RE/EE enterprises in Africa, Asia and Latin America
  • Further financial innovation and product development with private sector participation.
  • Enticement of commercial global capital players to make RE/EE investments in emerging markets.
Programme sector: 

RE & EE (Business&Finance)

Stage of project: 

Completed

Location: 

CN/China, BR/Brazil, MX/Mexico, IN/India, ZA/South Africa, ET/Ethiopia, TZ/Tanzania, UG/Uganda, ZM/Zambia (E+Co investments reach over 20 developing countries in Africa, Asia, Latin America)

Duration: 

2009 - 2010

Budget: 

€ 196,701 including co-funding from Institutional Investors + E+Co lawyers

Implementing agency: 

E+Co

REEEP grant funded by:

United Kingdom

Norway