NDF - Financing for climate change and development projects

Nordic funds invest in responsAbility Renewable Energy Holding in Africa

Photo: Jagath Navinda, responsAbility
Hydro power plant at Mukungwa River in Rwanda under construction during the dry season.
Photo: Jagath Navinda, responsAbility
Engineers from rAREH explain some hydro-power construction issues to the main contractor on-site.
15.08.2017

Two new Nordic equity investments will support African countries to increase their clean energy production. The Nordic Development Fund and Norfund have approved a total of USD 19 million of equity investments in responsAbility Renewable Energy Holding (rAREH). Other investors in rAREH are Germany’s KfW and Switzerland’s responsAbility.

responsAbility Renewable Energy Holding (rAREH) aims to increase the renewable energy supply in Sub-Saharan Africa in a responsible way while generating attractive, long-term and stable cash flows across a diversified portfolio of renewable energy plants. rAREH was created in December 2013 with the goal to invest in and co-develop small- and medium-sized renewable energy projects up to 50 MW at various stages of the project life cycle, from development and construction to operations.

A particular focus will be on the development stage and to facilitate bankable, long-term power purchase agreements with national grid operators. The current portfolio comprises 14 projects totalling about 160 MW in development across the region. Many of these projects fall under a feed-in tariff (FIT) programme with the local utility company as an off-taker, whereby tariffs are fixed by the government. The offering encompasses equity and quasi-equity financing. rAREH is managed by responsAbility Investments AG, a Zurich-based asset manager.

rAREH has established a Nairobi-based implementation team combining experienced power project developers with young, talented local staff. This team is developing a pipeline of projects in various African markets. These are mostly run-of-the-river hydropower projects.

Pasi Hellman, Managing Director of NDF, says: “NDF is proud to support renewable energy supply in Sub-Saharan Africa by focusing on the equity niche markets. The demand for energy is a key development challenge in Africa, and this project addresses the issue in a socially and environmentally responsible way. We will help to implement the projects in the pipeline and act as a catalyser for further investments by other development finance institutions as well as private investors.”

Kjell Roland, CEO at Norfund, says: “Investing in clean energy projects is a high priority for Norfund as access to energy is crucial for development and poverty reduction. This investment will give Norfund a 14% share in responsAbility Renewable Energy Holding. In addition to being an investor, we are prepared to contribute with expertise by being an active owner and will appoint a qualified representative with board experience to the rAREH board.”

Rochus Mommartz, CEO at responsibility Investments, says: “Investment and co-development of renewable energy in small- and medium-sized projects – a niche area – in Sub-Saharan Africa are vital as they support local access to affordable clean energy and climate stability by reducing the carbon intensity of energy.”

 

responsAbility Renewable Energy Holding was established by responsAbility Investments AG in conjunction with the German Federal Ministry for Economic Cooperation and Development (BMZ) and the German development bank KfW. It is a private company with limited liability under Mauritian law and was founded in December 2013 with seed capital of USD 25.5 million that was invested by KfW on behalf of BMZ. responsAbility Renewable Energy Holding will focus on exploiting long-term opportunities in the renewable energy sector in Sub-Saharan Africa across multiple technologies. To achieve this, it will invest in and develop small-scale power plants. These plants will initially take the form of run-of-the-river, small-scale hydro and biomass energy generation facilities in East Africa that have secure, long-term power purchase agreements with national grid operators or other creditworthy off-takers. The company is managed in Zurich and Nairobi by responsAbility Investments AG, one of the world’s leading independent asset managers specialising in development-related sectors of emerging economies.

The Nordic Development Fund (NDF), established in 1988, is the joint development finance institution of the five Nordic countries – Denmark, Iceland, Finland, Norway and Sweden. The objective of NDF's operations is to facilitate climate-change investments in low-income countries. NDF finances projects usually in cooperation with bilateral, multilateral and other development institutions. The operations mirror the Nordic countries’ priorities in the areas of climate change and development. NDF flexibly uses grants and other forms of financing for climate-change mitigation and adaptation activities. For more information, see www.ndf.fi

Norfund is the Norwegian state-owned development finance institution mandated to develop sustainable enterprises in poor countries. Norfund invests in clean energy, financial institutions and agribusinesses. The main investment region is Sub-Saharan Africa, as well as selected countries in Asia and Latin America. Clean energy is the largest component of Norfund’s portfolio and includes investments in hydro, solar and wind power projects. By year-end 2016, Norfund had USD 1.9 billion in committed investments. For more information, see www.norfund.no.

 

Contact for media enquiries:

NDF: Mats Slotte, mats.slotte@ndf.fi , phone: +358 10 618 0298
Norfund: Inger Nygaard, inger.nygaard@norfund.no, phone: +47 47701248