Speaking at a side event on Renewable Energy Performance Platform as a tool to deliver Nationally Determined Contribution (NDC) Objectives on the first day of the conference, the experts believe that Africa's energy poverty which leaves about 600 million people without access to electricity and McKinsey's projection on $490 billion investment needed by 2040 for new generation capacity in Africa constitute an invitation to explore innovative ways of overcoming the challenge.
One of such innovative solutions, according to Gareth Phillips, African Development Bank's Chief Climate and Green Growth Officer, is results-based financing mechanism which allows donors to channel climate finance into different types of energy projects.
“Results-based financing is attractive because it takes away a lot of the risks from the donor and it simply says you give me the results and I will give you the money and it frees up the private and entrepreneurial sectors to come up with solutions to these problems,” Philipps added.
Results-based climate finance as a crediting mechanism is increasingly becoming an avenue to scale carbon mitigation by routing financial flows towards fiscal reforms for renewable energy, incentivize sectoral investments and leverage private capital.
Subha Nagarajan, Managing Director of Africa Overseas Private Investment Corporation (OPIC), and Andreas Gunst of DLA Piper were of the view that the Renewable Energy Performance Platform (REPP), which aims to mobilise private investment in renewable energy in Sub-Saharan Africa, address early-stage barriers to renewable energy project development, and focus on small to medium-sized renewable energy projects can rewrite Africa's energy story for good.
The platform's innovative approach to providing technical and financial advisory while facilitating access to risk mitigation instruments and finance provided by REPP partners addresses challenges of funding gap, absence of development capital, lack of expertise in financial structuring and access to cheaper funding on the continent of Africa.
Developed by the United Nations Environment Programme (UNEP) and the European Investment Bank (EIB) in collaboration with the AfDB, USAID, OPIC and a host of banks with an initial funding of £48 million from the UK's Department of Business, Energy and Industrial Strategy (BEIS), the Platform supports technologies in solar, run-of-river hydropower, onshore wind, biomass, geothermal and waste-to-energy with project types such as grid-connected and off-grid, public utilities and private off-takers, greenfield, brownfield and renewable storage hybrids.