A private equity fund of US$30 million will be used to invest in solar photovoltaic and PV-related businesses in developing countries.
WASHINGTON, DC, US, 2001-04-09 <SolarAccess.com> The Global Environment Facility and the International Finance Corporation have launched the Solar Development Capital (SDC) to support PV in developing countries and in countries with economies in transition. “Attracting greater private sector involvement in renewable energy projects in the developing world is a pre-requisite to achieving sustainable development,” says Mohamed El-Ashry, CEO and chairman of GEF. “This is an important step in GEF’s commitment to support businesses which can help countries grow their economies, improve local air quality, and help prevent climate change. By helping shoulder some of the risk of these investments, GEF brings new players into the renewable energy arena.” The fund will focus on providing capital to companies that distribute PV products or services in non-electrified rural areas in developing nations. GEF support will enable most of these companies to provide customer leasing or credit to overcome the high initial expense of PV systems. One of the project’s main objectives is to highlight how renewable energy can be a profitable investment for private sector firms, and that future investments do not need public sector subsidies. Solar electric PV systems are one of the most environmentally-benign and cost-effective sources of decentralized power, says the GEF, and can be used to reach billions of people in developing countries who do not have access to utility power. GEF support for the SDC is implemented through IFC, the largest multilateral source of loan and equity financing for private sector projects in the developing world, in collaboration with a number of private investors. In addition to SDC, GEF has increased private sector commitment to renewable energy through its Small & Medium-size Enterprise (SME) program that provides long-term, low-interest loans to qualified firms. It also operates a Renewable Energy & Energy Efficiency Fund (REEF) that is the first global private equity fund devoted exclusively to tapping the opportunities in emerging markets for renewable energy with investments of $100 million, and its Photovoltaic Market Transformation Initiative to provide concessional financing of up to $5 million for private sector PV projects. GEF investments in renewable energy and climate change mitigation projects exceeds $1.1 billion for 300 projects in developing countries, which have attracted an additional $5 billion in co-financing from national governments, the private sector, non-governmental organizations, and other multilateral and bi-lateral donors. Overall, there are more than 750 GEF projects underway in over 150 countries.