The SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides the May update on global developments in sustainable energy finance.
Sustainable Energy Finance Update: Infrastructure Central to Renewable Energy Deployment and Access
The push for renewable energy and improved energy access often requires improved or new energy infrastructure. Developing and building green energy infrastructure was a key trend among recent energy funding announcements, which contribute to realizing the Sustainable Development Goals (SDGs) 7 (affordable and clean energy), 9 (industry, innovation and infrastructure) and 13 (climate action).
Green Energy Infrastructure Gets a Boost
Green energy infrastructure was the focus of various recent events. The Global Infrastructure Forum 2017, co-hosted by the European Investment Bank (EIB) and the Inter-American Development Bank (IDB), was held in Washington DC, US, on 22 April 2017. In addition, two regional development banks addressed the importance of green energy infrastructure at their annual meetings.
The Global Infrastructure Forum 2017, which focused on the theme ‘Delivering Inclusive, Sustainable Infrastructure,’ provided a venue to discuss how multilateral development banks (MDBs) can best work with countries and the private sector to create markets for infrastructure projects. The Forum brought together potential investors, representatives of the UN and the G20, as well as the Heads of the African Development Bank (AfDB), the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank, the European Bank for Reconstruction and Development (EBRD), the EIB, the IDB, the Inter-American Investment Corporation, the International Finance Corporation (IFC), the Islamic Development Bank, the New Development Bank and the World Bank. At the Forum, the MDBs agreed to deepen their collaboration with the private sector in order to secure investment in infrastructure necessary for sustainable development.
At the ADB Annual Board of Governors meeting, ADB President Takehiko Nakao underlined the need for investments in infrastructure to support economic growth and combat climate change in the Asia Pacific region.
At its annual meeting, the EBRD showcased its Green Economy Transition approach, which puts environmentally-friendly investments at the core of the EBRD’s strategy. The Sustainability Report 2016, the first since the new approach was adopted, highlights the early results realized through including environmental considerations in infrastructure and other investments.
Support for Renewable Energy Frameworks in India, Greece and Egypt
Renewable energy frameworks are essential for the deployment of clean energy and the past weeks have brought news of support for such frameworks in India, Greece and Egypt.
The ADB raised three billion Indian Rupees from a new issue of green bonds. Proceeds of these bonds will be mobilized into the ADB’s co-financing arrangement for the ReNew Clean Energy Project that involves wind and solar projects across six states in India.
The EBRD approved a EUR 300 million renewable energy framework for Greece. The package will finance investments in renewable energy generation, and electricity distribution and transmission capacity to improve energy efficiency and bring renewables into the grid.
The Green Climate Fund (GCF) approved a financing framework for renewable energy in Egypt, with two stages. The first is a technical assistance programme to enhance planning and policy making for renewable energy. Second, the project will support scaling up investments to develop and construct renewable energy infrastructure on the ground. Three other entities, the EBRD, the Agence Française de Développement (AFD) and the EIB, created the Green Economy Financing Facility (GEFF) with EUR 140 million to support renewable energy in Egypt.
Linkages Between Gender and Green Energy
Two initiatives have highlighted the role of gender in climate projects, illustrating how SDG 13 (climate action) relates to SDG 5 (gender equality) and support one another. The ADB and the Government of Canada established a new trust fund, called the Canadian Climate Fund for the Private Sector in Asia II, to support greater private sector participation and improve gender equality in the Bank’s climate change initiatives. At an EBRD launching its first ‘Economic Inclusion Strategy,’ several participants discussed the vital role of women in the green energy sector.
In term of project news, various new financing will support solar and hydropower energy projects.
Solar Energy in Spotlight
Some of the solar energy news in May came from Asia, Africa and Europe.
The ADB is helping to build Cambodia’s first large-scale solar farm with a debt financing package of US$9.2 million. The solar farm will be near Bavet, a special economic zone in the Svay Rieng province, and will help power the country’s economic growth into the future.
The ABD, through the Sustainable Energy Fund for Africa (SEFA) approved a US$965,000 grant to help build a bankable business case for an off-grid solar rooftop project in Zimbabwe. The project aims to compensate for lapses in the national grid, provide reliable electricity to hundreds of small and medium-sized enterprises, and reduce the need for diesel as a backup fuel.
In Cyrprus, solar plants funded by the EBRD have come online. A 1.5 MW plant in Nisou was unveiled. It is one of five plants in Cyprus that will together add 12% to the country’s solar capacity.
Hydropower: Its benefits and Impacts
News related to hydropower in May have come from Tajikistan and the Solomon Islands, and others have underlined both the benefits and impacts of this type of renewable energy.
Multiple projects seek to support hydropower in Tajikistan. The GCF is supporting two hydropower projects to make the country’s hydropower infrastructure more resilient to climate change. According to the project, hydropower accounts for 98% of Tajikistan’s electricity, but is vulnerable to changing precipitation and glacial patterns. The World Bank is also hydropower in Tajikistan, with a US$225.7 million financing package from the International Development Association’s Nurek Rehabilitation Project.
In the Solomon Islands, the GCF is supporting the Tina River Hydropower Development Project, which will provide 65% of electricity demand for the country’s capital city by 2022.
The IFC and the Nature Conservancy have called for a new landscape approach to achieve sustainable hydropower. Recognizing the benefits of hydropower, the IFC and Nature Conservancy note the need to consider and account for impacts beyond the immediate project site in order to achieve sustainable environmental, economic and social objectives.
The IFC is providing US$66 million in financing to Triconboston Consulting Corporation to help construct and operate three new wind farms in Pakistan. The IFC will seek to mobilize a further US$172 million to help Pakistan diversity its energy sources, reduce the cost of electricity and increase investment in the power sector.
Capacity Building for Energy Efficiency
Energy efficiency is considered by many to be the “first fuel,” as it is competitive, cost effective and widely available. However, the deployment of energy efficiency measures often require awareness raising and capacity building initiatives. Various developments of the past weeks have focused on this issue.
The Global Environment Facility (GEF) announced support for the Industrial Energy Efficiency Accelerator. With the UN Industrial Development Organization (UNIDO) and the Carbon Trust, the Accelerator will disseminate and share best practices, policies and toolkits to catalyze energy efficiency in the industrial sector.
The Caribbean Development Bank (CDB) and Government of Canada supported a workshop to bring together planning and energy professionals from across the Organisation of Eastern Caribbean States (OECS) in Antigua and Barbuda for training on the fundamentals of renewable energy and energy efficiency to help OECS members carry out their sustainable energy plans.
Other energy efficiency developments have come from Europe. The European Commission and the EIB agreed to reinforce the European Local Energy Assistance (ELENA) facility. ELENA provides grants to support project development for large-scale projects on energy efficiency, distributed renewable energy and sustainable urban transport. Among these three, the majority of the funding, EUR 20 million is to support the development of energy efficiency and distributed energy projects.
The EIB is partnering with ABN Amro to support investments to improve fuel efficiency in the European shipping fleet. The agreement will support projects to retrofit existing ships and construct new, greener vessels.
Energy Access Increased in Asia and Africa
Various projects aimed at reducing energy poverty have come from the Asian and African continents.
In Myanmar, 130 representatives from the ADB and the Government gathered for a forum to discuss off-grid renewable energy options, which many viewed as a key step to bring energy to the 64 000 villages currently lacking access and to help meet the Government’s 100% electrification target by 2030.
The World Bank approved US$59 million to help Bangladesh meet the increasing demand for, and access to, electricity by improving the reliability and efficiency of the entire power system, from electricity generation to transmission. In the Democratic Republic of the Congo, the World Bank approved a grant for a project called Electricity Access and Services Expansion (EASE). The US$118 million grant, and accompanying US$27 million credit, will fund the project’s aims to provide new or improved electricity service to two million people, including households that will be connected to electricity for the first time.
The World Bank and the Government of Nigeria held high-level meetings to discuss the county’s Power Sector Recovery Program, which seeks to improve access to electricity by implementing sector reforms, enhancing the sector’s financial viability, mobilizing private sector investment, and reducing losses in distribution companies.
These project announcements came on the heels of a call to close Africa’s energy gap made by Chair of the Africa Progress Pan, and former UN Secretary-General, Kofi Annan and the President of the African Development Bank (AfDB) Akinwumi Adesina.