Sustainable Energy Finance (SEF) Program
Given below are some links related to a new innovative climate finance solution developed by the Climate Financial Advisory Services (CFAS) division of SMEFUNDS Capital Limited called Sustainable Energy Finance (SEF) Program:
- Presentation prepared by Paul Steversabout the SEF Program: LINK
- CFAS’s questionnaire for project developers: Click to Download
- Summary of opportunity to accelerate investment in Climate Solutions, see: ClimateSAN.org/ii
- Selected Online Resources for Project Developers
- De-risking Investment in Climate Solutions
The SEF Program funds a project through a combination of a bank loan, which is partly guaranteed by the multi-billion dollar Africa Guarantee Fund, an investment by an equity investor and a relatively small investment by the project developer. To incentivize and reduce the risk to the equity investor, part of the reimbursement to this investor will be from carbon emission offset payments.
If a project is large enough, after it is operational and generating in the revenue, a Green Bond would be issued to enable the project developer to “cash out” and use the proceeds of this transaction to start the next project. To keep the project developer incentivized to purchase good quality products and keep it working well, this developer will be contracted to perform the operation and maintenance of the project after the refinance is completed via a Green Bond.
Given below is an example application ofCFAS’s Sustainable Energy Finance (SEF) Program for a solar-power related project:
1) 70% total project cost is funded by a loan from a local bank in Africa:
a) Half of the loan collateral for this project is a loan guarantee by the Africa Guarantee Fund.
b) Other half of loan collateral is comprised of the equipment assets ( solar panels, inverters, etc.) purchased for the project.
2) 20% of project is funded by an equity investor. (After 2 to 3 years, a “cash out” via a Green Bond). When possible, investor will be partly reimbursed by carbon emission offset (Carbon Credit) payments.
3) 10% by project developer (After 2 to 3 years, a “cash out” via a Green Bond).