Camco aims to mobilize 250 million USD in REPP 2 to accelerate electrification in Africa. In pursuit of this goal, the Green Climate Fund (GCF) has contributed 50 million USD in blended financing.
Camco : Entity accredited by the Green Climate Fund
With 30 years of experience, Camco operates as a specialized impact fund manager in green energy and climate finance. The entity collaborates with partners who share the vision of a cleaner future and has already supported over 200 projects in 30 countries. The company obtained its accreditation in 2021 from the Green Climate Fund (GCF), an institution with a globally recognized reputation for credibility.
In Sub-Saharan Africa, nearly 590 million people lack access to electricity. To address this energy deficit, Camco mobilizes green funds that will be invested in renewable energy projects. The company aims to gather financing of 250 million USD, directly sourced from various financial and governmental institutions, including the GCF and the British government.
According to Benjamin Hughes, Director of Investments at Camco, the GCF has allocated 50 million USD in blended funds to REPP 2. Furthermore, the fund manager is working with other donors and private investors to mobilise a total of 1.6 billion USD.
Renewable Energy Performance Platform 2 (REPP 2)
The Renewable Energy Performance Platform 2 (REPP 2) focuses on three main renewable resource technologies: solar, wind, and hydroelectric. During its operational period, the fund aims to invest in 35 to 40 projects in the decentralized renewable energy sector, particularly in developing countries. The initiative is expected to reduce greenhouse gas emissions equivalent to 12.7 million tons of carbon dioxide.
The funds raised will be used to substantially provide clean, reliable, and affordable energy to 7.7 million people in Africa. The REPP2 approach also promotes women’s inclusion and empowerment in the clean energy sector. The initiative plans to invest 70 million USD in projects that meet the 2X gender lens investment criteria. Overall, the distribution of REPP 2 funds is as follows:
- 50 % of the assets are allocated to the development of mini-grids and networks in remote locations.
- 40 % is dedicated to solar, wind, and hydroelectric power plants under 25 megawatts.
- 10 % is reserved for domestic solar systems.
REPP 2 : An evolutionary step of the REPP Facility
The REPP 2 is an improved version of its predecessor, the REPP Facility. Fully funded by the Foreign, Commonwealth, and Development Office (FCDO), this initiative has a total budget of 120 million USD. Camco emphasizes that 50 million USD from the REPP Facility will be contributed as counterpart funds to the REPP 2. With the GCF investment, the total mobilized resource amounts to 100 million USD. This amount will be used to secure the capital and generate appropriate returns for commercial investors in the REPP 2.
Technical assistance platform for African startups
In parallel with the REPP 2 fund, Camco is establishing a technical assistance platform aimed at supporting project leaders and entrepreneurs in Africa. Approximately 30 % of this assistance facility is specifically targeted at projects led by women, SMEs, and locally-owned businesses. The launch of this platform is scheduled for early June 2024. The system has a dedicated website with an online form, allowing any project leader to contact Camco and submit their Concept Note.
Regarding the selection criteria, REPP 2 requires compliance with the environmental and social standards of the platform, inspired by those of the GCF. In terms of regulation, Camco collaborates with the governments of the priority countries targeted by REPP 2. Discussions are underway between the two parties to determine the extent to which the private sector can access green financing. Additionally, the technical assistance platform has mechanisms to help governments improve regulation and the legal framework.
Mixed financing : Leverage effect for the mobilization of green funds
Investors perceive a high level of risk compared to the potential return in the field of green finance, particularly for projects in sub-Saharan Africa. However, Camco has already successfully mobilised resources in similar proportions with the first platform, the REPP Facility. In the hope of replicating this pattern, the entity has structured the REPP 2 fund as blended finance. This green financing mechanism relies on sources of public, private, and commercial funding.
This financing model offers a viable solution to raise secured capital, which then serves as a lever to mobilize other resources. This approach helps to raise funds for small and medium-sized enterprises (SMEs) while ensuring the confidence of commercial investors.
REPP 2 capital tranche model
Camco structures the REPP 2 fund into three capital tranches. One of these tranches, subordinated, offers lower returns than what other commercial investors would demand for a similar level of risk. This bond portion is placed lower in the order of repayments compared to the other two tranches. In the event of financial default, holders of subordinated tranches are repaid after holders of non-subordinated capital portions. By primarily assuming the subordinated tranche, the GCF contributes to improving the Return on Investment (ROI) of the other two tranches.
Following these steps, Camco has the opportunity to collaborate with investors more focused on the commercial sector. This allows them to negotiate approaches with more significant returns in line with their goals. The company aims to mobilize approximately 786 million USD. from third-party investors in the first phase. Subsequently, this green fund manager plans to add nearly 1.6 billion USD in addition to the almost raised 250 million USD.
To achieve these goals, this green fund company collaborates closely with development banks that operate in the green finance sector. The entity also plans to establish partnerships with other local African banks interested in investing in companies that are active in green energy. Camco supports financial institutions in every step aimed at accessing funding provided by the REPP 2.
