Tag Archives: The Lab

Powering climate action – the 2016 Fire winners

November 28, 2016 |

 

The Paris Agreement marks the start of a new era in climate policy, with commitments to climate action made by governments, private sector entities, and NGOs around the world. However, for these commitments to be realized and a corresponding transition to a 2-degree pathway achieved, trillions of investment will need to be mobilized – and quickly, with a significant portion coming from private sector sources.

Climate Policy Initiative (CPI) is at the forefront of work to respond to the urgency of the climate challenge by targeting scarce public resources to mobilize significant private finance into low-carbon, climate-resilient development. As part of its climate finance program, CPI serves as Secretariat to The Global Innovation Lab for Climate Finance (The Lab), which convenes public and private stakeholders to design, pilot, and accelerate transformative financial instruments, with the aim to drive billions of dollars of private investment into climate change mitigation and adaptation in developing countries.

The Lab and its initiatives have been endorsed by the G7 and have raised nearly USD 600 million in seed funding for renewable energy, energy efficiency, and climate resilience projects. Currently, the Lab is seeking ideas for its next cycle that can drive finance in India and Brazil. The Lab also presents The Fire Awards, which identify and accelerate powerful, early-stage pilots and businesses that can unlock private finance for clean energy and green growth around the world.

Indeed, in the six months following the Bloomberg New Energy Finance (BNEF) Future of Energy Summit in New York, there have already been several successful outcomes for the 2016 Fire Winners, which kicked-off implementation of work plans to achieve growth goals, with support of Fire Working Groups in May:

  • In September, the team behind Affordable Green Homes, a project to catalyze a market for affordable green housing in Sub-Saharan Africa, was invited to participate in the formal launch of a UN and private sector platform to generate financing solutions for the Sustainable Development Goals. At the launch meeting, led by UN Secretary General Ban Ki Moon, International Housing Solutions (the global private equity firm leading Affordable Green Homes) was recognized for its innovative approach to drive investment in and deliver energy and water efficient housing. The team will continue to help shape the direction of the UNSG platform.
  • The Developing Harmonized Metrics for the PAYG Solar Industry initiative championed by Anna Lerner of the World Bank Group, also moves forward, achieving a major milestone with the recent publishing of a white paper titled, How can Pay-as-you-go Solar be Financed?. The paper, which was one of the main outputs of the Fire Working Group, explores a number of the risks and challenges associated with structured finance solutions for the PAYG sector. On 11th October, the paper was also presented and discussed in a dedicated session at the BNEF Future of Energy EMEA Summit in London. The session was led by Itamar Orlandi (Head of Applied Research, BNEF). Panelists included Fire Working Group Members, David Battley (Director of Structured Finance, SunFunder) and Peter Mockel (Senior Industry Specialist, Climate Business Department, IFC), as well as Giuseppe Artizzu (Head of Global Energy Strategy, Electro Power Systems Group), Mansoor Hamayun (Chief Executive Officer, BBOX), and Manoj Sinha (Co-Founder and CEO, Husk Power Systems). The white paper is available on the BNEF website.
  • An announcement was released on the planned scale-up of the Investor Confidence Project (ICP), an Environmental Defense Fund led initiative to standardize and increase investment in energy efficient buildings. The scale-up plan is founded on a new partnership with the Green Business Certification, Inc. (GBCI), which also administers the LEED, EDGE, PEER, WELL, SITES, GRESB, and Parksmart certification programs. The new partnership aims “to achieve a true, worldwide standard to unlock the potential of energy efficiency.” The Fire Secretariat will host a dedicated 2 hour roundtable in London on 7th December to discuss and build momentum for the new partnership. The roundtable will comprise Fire Working Group Members and key stakeholders in the investment and real estate sectors. If you would like to attend, please let us know at info@financeforresilience.com. More information on the new partnership is available on the ICP and decentralized energy
  • Finally, Grips, which provides reliable, clean energy beyond the world of fossil fuels and public grids, was supported by a Fire Working Group to make connections with over a dozen investors, which will help the initiative move forward. In recognition of its innovative approach to deliver competitive, clean energy to industrials in developing countries, Grips’ CEO, Alexander Voigt, was also invited to participate in the technical workshop to set up a UN-led platform to scale-up finance for the Sustainable Development Goals.

These achievements mark major milestones for the 2016 Fire Winners, as they continue to blaze forward and grow their impact. For those interested in learning more about any of the 2016 Fire Winners or to be involved in upcoming consultations, please contact us at info@financeforresilience.com.

“Getting access to international experts and advice made it possible to accelerate the launch of the KPI framework, grow our partner network and identify new useful applications for the data platform.” –Anna Lerner, World Bank Group

“Winning FiRe has clearly accelerated the implementation of Grips. Through the increased exposure to an international audience of financial and energy experts we have received an increasing number of project leads, partnership requests, and financing offers. We are currently advancing discussions on all sides.”–Arvid Seeberg-Elverfeldt, Grips

The Global Innovation Lab for Climate Finance identifies, develops, and pilots transformative climate finance instruments, with the aim to drive billions of dollars of private investment into climate change mitigation and adaptation in developing countries. Made up of public and private sector members, the Global Lab and its initiatives have been endorsed by the G7 and have raised nearly USD 600 million in seed funding for renewable energy, energy efficiency, and climate resilience projects.

The Fire Awards accelerate powerful, early-stage pilots and businesses that can unlock finance for clean energy and green growth. Climate Policy Initiative serves as the secretariat for the Fire Awards alongside the Global Innovation Lab for Climate Finance (The Lab). The Fire Awards and The Lab are funded in part by Bloomberg Philanthropies, and Bloomberg New Energy Finance provides in-kind support.

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Instruments of Change: Raising Investments for India’s Climate Commitments

December 18, 2015 |

 

The international climate agreement that emerged from the Paris negotiations this past weekend marks a historical turning point for the whole world, but particularly for India.

As a part of the global climate deal, national governments have shared plans for their countries’ action on climate change, and India’s contribution is ambitious — promising that renewable energy will be 40% of the country’s expected electricity generation capacity in 2030, along with a 35% reduction in carbon intensity by 2030 from 2005 levels.

India has also set one of the most ambitious renewable energy targets of all ¬- 100GW of solar power by 2022. This is more than half of the amount of solar power deployed worldwide at the end of 2014, and more than 20 times India’s current solar deployment. Additionally, India has also set a wind power target of 60GW by 2022, up from 25GW currently.

At the same time, Prime Minister Modi’s administration is likely to significantly increase the production of domestic coal. This is because one of the nation’s top priorities is to rapidly deploy energy in order to meet the needs of its growing economy and to provide electricity to the 400 million Indians who currently lack it.

Recognising the harmful air pollution and greenhouse gas emissions that an increase in coal production will bring, Prime Minister Modi stated during the Paris negotiations a willingness to further move away from coal if there were more finances available for renewable energy.

However, India faces two key challenges around funding for renewable energy and other green infrastructure: a shortage of available financing, and financing at unattractive terms — such as high cost of debt, short tenor and variable interest rates — which can add up to 30% to the cost of renewable energy in India, compared to the US or EU.

 

Public-private collaboration will be essential to raising the finance needed for India’s cleaner growth. While the right domestic policies will be key to facilitating finance, greatly scaling up investment from the private sector will be the only way to mobilise the full amount of capital needed to meet India’s renewable energy targets.

In order to scale up private investment, India needs financial instruments for renewable energy and other green infrastructure that are a better match with investors’ needs.

For example, one source of investment that has great potential but requires innovative finance instruments to facilitate it is foreign investment. Over the next five years, India expects over $160 billion of investment from international developers and banks to finance renewable energy projects. However, foreign investors are wary of investing in infrastructure in India due to the risk of extreme and unexpected currency devaluation.

Because currency exchange rates can be volatile, when a renewable energy project is financed by a foreign loan, it requires a currency hedge to protect against the risk of currency devaluation. Currently, market-based currency hedging in India is too expensive, making foreign financing just as expensive as domestic financing. An innovative instrument that can reduce the currency hedging cost could mobilise more foreign capital and spur investment in renewable energy.

A new public-private initiative in India, the India Innovation Lab for Green Finance, aims to identify, develop, and accelerate these innovative solutions to drive more investment for green growth in India.

The India Lab brings together experts (from the government, financial institutions, renewable energy, and infrastructure development) to select and help launch this next wave of cutting-edge finance instruments. Since its launch on 12 November, the India Lab has received the endorsement of the Ministry of New and Renewable Energy, and was supported in a joint announcement on energy and climate by Prime Minister Modi and UK Prime Minister David Cameron, during Prime Minister Modi’s visit to the UK in November.

The India Lab is currently seeking ideas for innovative finance instruments for renewable energy (including utility scale, distributed, and off-grid), energy efficiency, urbanisation, and other channels for green growth that can overcome barriers and risks and scale up more capital from new investors. Interested parties can visit www.greenfinancelab.in/ideas to learn more.

The new global climate agreement represents a moment of opportunity, for both India and the rest of the world, to capture the momentum and excitement that has come with the hope for a more climate-resilient future, and channel it into real work and real action.

There has never been a better, or more important, time to scale up finance for renewable energy projects and other green infrastructure that can support cleaner economic growth in India.

The India Innovation Lab for Green Finance can help India achieve its vision for a cleaner and more prosperous future by driving needed private investment to its green infrastructure targets. Let’s get to work — now.

A version of this first appeared in the Huffington Post.

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