Green Climate Fund allocates $50 million to REPP 2 for renewable energy expansion in Sub-Saharan Africa
25 October 2023
The Green Climate Fund (GCF) Board has 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.
The latest research highlights a pressing need in Sub-Saharan Africa, where approximately 590 million people lack access to electricity. The International Energy Agency estimates that a staggering $22 billion must be invested annually to provide reliable energy access across the continent by 2030, aligning with Sustainable Development Goal 7. Simultaneously, Africa grapples with escalating climate challenges, requiring an estimated $2.8 trillion by 2030 to implement its Nationally Determined Contributions under the Paris Agreement.
REPP 2 represents a transformative blended finance initiative that leverages public, private, and commercial resources to support small-scale and decentralized renewable energy projects in Sub-Saharan African nations. The fund's private sector approach, with a strong emphasis on aiding climate-vulnerable communities, is projected to achieve the following outcomes during its lifetime:
- Facilitate 35-40 investments to advance decentralized renewable energy and bolster the resilience of national grid infrastructure, thereby fostering economic development in Sub-Saharan Africa, especially in the Least Developed Countries.
- Provide clean, reliable, and affordable power to approximately 7.7 million people across Africa, increasing economic opportunities and access to energy-driven activities.
- Offset 12.7 million tonnes of carbon dioxide equivalent in greenhouse gas emissions over the projects' lifespan.
- Invest $70 million in projects aligned with the 2X gender lens investing criteria.
- Mobilize $786 million in third-party funding to promote green growth in targeted countries.
REPP 2 represents an evolutionary progression from the $120 million REPP facility, which was fully funded by the United Kingdom's Foreign, Commonwealth, and Development Office (FCDO).
The announcement comes following the signing of an indicative term sheet by the REPP Board for a junior equity investment of up to $50 million from REPP into REPP 2. The combined junior equity investments of up to $100 million from GCF and REPP are strategically designed to safeguard capital and generate suitable returns for REPP 2's commercial investors.
Ben Hugues, Investment Director at Camco, emphasized the importance of REPP 2 in underpinning Africa's renewable energy sector growth. “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 benefit,” he said.
Peter Coveliers, REPP Board member and a founder of the REPP initiative, stressed the significance of blended finance in attracting private sector investments 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.”
