The Global Innovation Lab for Climate Finance has announced the endorsement and launch of six innovative financial instruments for climate-related projects in developing countries.
The Lab member institutions met last week at The Rockefeller Foundation in New York on the margins of the UNSG Climate Action Summit. Lab members voted to endorse all six financial mechanisms and enterprises in the Lab’s 2019 class, officially launching them for operation, and offering inputs for their implementation pathways.
One of these projects is the Solar Securitization for Rwanda, a tradable solar asset-backed security that can accelerate the deployment of solar home systems in East Africa, by helping solar developers reduce their leverage and access capital for expansion. At scale, it can provide clean energy access to 2 million households in Rwanda and neighboring countries, translating into a $ 100m size instrument.
The initiative will be led by the Development Bank of Rwanda and the Lab will open a call for ideas for in mid-October for next year’s cycle, where it will be targeting ideas to drive investment for climate action in developing countries.
Currently, 185 million people in East Africa are without access to electricity, relying on high-cost and carbon intensive diesel generators or hazardous kerosene lamps. Off-grid solar home systems offer a clean, reliable, and affordable energy solution for homes in East Africa. However, as most of these systems are financed to customers, sales rely on the solar developers’ ability to leverage their own balance sheets. This ability is constrained by the substantial collateral required by the few commercial and concessional funding sources available.
The Lab is an initiative of over 60 public and private investors and institutions, and accelerates much-needed investment solutions to support developing countries to meet their climate change and sustainable development goals.
Created in 2014, the Lab has now launched 41 instruments that have collectively mobilized nearly $2b for action on climate change and sustainable development.
Lorenzo Bernasconi, managing director, The Rockefeller Foundation – “Financial innovation will be crucial in accelerating clean energy access for the hundreds of millions who still lack a reliable source of electricity. The Lab is helping to develop and deploy marketable solutions to fill this gap, helping to overcome one of the greatest barriers to universal energy access.”
Norbert Gorissen, deputy director general, International Policy, Federal Ministry for Environment, Nature Conservation, and Nuclear Safety, Germany – “It’s time for countries to translate their national climate plans into concrete investments. The new instruments endorsed by the Lab show great potential to open up new markets and opportunities for effective and ambitious action on climate change.”
Antha Williams, head of environment, Bloomberg Philanthropies: “Sustainable investment is critical as we tackle the key global challenges of the 21st century – and the Lab is a leading force in successfully mobilizing investment to accelerate climate action.”