Fund-of-Funds Investing in Clean Energy Infrastructure in Developing Countries

This activity is leveraging public money to mobilize private funding for building clean energy capacity in developing countries. The Global Energy Efficiency and Renewable Energy Fund (GEEREF) represents the first fund-of-funds that invests in small- and medium-sized renewable energy and energy efficiency projects in developing countries. This project provides access to sustainable energy for people in developing countries, fights climate change, and seeks robust financial returns for investors.

Fast facts:

112 million euros in public funding from Germany, Norway, and the European Union invested at launch in 2008;
74 million euros committed to six funds;
50 million euros of investment commitments secured from private investors;
14 clean energy infrastructure funds cornerstoned across Asia, Africa, and Latin America

The problem

Developing countries are hungry for electricity. But development of conventional, fossil fuel-based energy has a heavy environmental cost. Small- and medium-sized renewable energy and energy efficiency projects have the potential to help such countries reach their energy needs sustainably – but these projects struggle to attract capital from private investors, which lack structured routes to finance them. Further, many private investors have limited appetite for emerging markets and sector-focused funds.

The solution

GEEREF anchors first-time fund managers investing in infrastructure projects in the sectors of energy efficiency and renewable energy in developing countries. The fund offers private investors enhanced access through a highly diversified program of clean energy infrastructure funds, underpinned by public sector investors.

This benefits private sector investors by allowing assets to be sold more quickly. As a result, overall net initial rate of return to private investors is boosted, with significantly reduced risk. For public investors, the benefit is massively increased efficiency on development assistance spending. Each euro invested in GEEREF catalyzes some 50 euros into clean energy megawatts in developing countries.

Helping the planet

Delivering new clean energy capacity averts the burning of fossil fuels and emission of greenhouse gases, thus mitigating climate change.

Helping people

Developing renewable energy capacity in developing countries is hoped to increase access of people in these countries to affordable, green electricity. This would improve quality of life and contribute to sustainable development.

Scaling up

Raising funds for such projects increases their capacity to expand further. For example, partner Berkeley Energy has now launched a new fund focused on Africa, which raised 100 million euros in less than six months form public investors, and is now seeking to raise the same amount from the private sector. Planned successor GEEREF 2.0 could reach five times the public and private sector commitments than that of its predecessor fund. The successor fund could expand its investment strategy to include other segments of the clean infrastructure market such as agriculture, forestry, water, and waste, as well as identify new public and private investor partners globally.