The Green Climate Fund (GCF) Board approved the first project by the Nordic Environment Finance Corporation (NEFCO) at the B.25 GCF Board meeting held in Geneva, Switzerland, on 10-12 March 2020. The project is being developed in cooperation with EarthSpark International (ESI) and it aims to bring off-grid energy to rural areas in Haiti.
Ash Sharma, who led the transaction at NEFCO, stated “We are very pleased to conclude our first project with the GCF. Working with the GCF’s Private Sector Facility and our partners at EarthSpark, we aim to bring clean, reliable and affordable energy to 84,000 Haitians in the south of the country, mostly customers at the base of the pyramid, by installing 5.8 MW across 22 mini-grids. These will generate climate change mitigation benefits of 10,700 tonnes CO2 emissions per annum.”
NEFCO will work with the project developer EarthSpark to expand two existing and successfully operating solar-powered mini-grids with an additional 22 fully solar-powered mini-grids in rural areas of Haiti. The USD 45.8 million project also has a number of softer support components, including a strong gender component, which builds on an already successfully applied ‘Feminist Electrification’ methodology for which ESI won the international UNFCCC Momentum for Change award in 2018.
The project will be financed through grants and loans from GCF, debt from senior lenders and equity investments. NEFCO will administer USD 9.9 million composed of a grant of USD 1.4 million and a subordinated loan of USD 8.5 million. The GCF financing, in turn, is expected to be catalytic in securing an impact equity investment of USD 1.3 million, co-financing of USD 8 million from result-based grants and debt from senior lenders totalling USD 23.6 million. This combined with equity (own assets) from ESI of a value of USD 3 million will finance the total capital investment of USD 45.8 million. The project has a leveraging ratio of 3.62, meaning that for each dollar of GCF funding, more than 3.6 dollars of additional funding is mobilised into the project.
“For over 10 years, EarthSpark has been ‘proving what is possible’ for clean energy in Haiti and building the foundations for successful microgrids. We’re thrilled to have found such a strong partner in NEFCO to help our team now scale up to bring clean, reliable electricity to many more towns,” said Ms Allison Archambault, President of EarthSpark. “The GCF funding will be transformative.”
The project successfully passed the independent Technical Advisory Panel (iTAP) assessment in October 2019 in which it received exceptional feedback and was judged as high impact against all six investment criteria. Documents are published at www.greenclimate.fund/document/gcf-b25-02-add06
The Term Sheet negotiations have been concluded, and a Funded Activity Agreement (FAA) will be negotiated between NEFCO and the GCF shortly after the Board meeting. The project will enter a period of further financial structuring which is expected to last 9-12 months.
In Autumn 2018, the Green Climate Fund (GCF) admitted NEFCO as one of its Accredited Entities (AE). To formalise the accreditation and create a shared contractual legal frame for the future cooperation, GCF and NEFCO signed the Accreditation Master Agreement (AMA) on 9 March 2020. NEFCO is the only Nordic institution accredited to the GCF.
For further information
Ash Sharma, Focal Point to the Green Climate Fund, NEFCO
firstname.lastname@example.org, +358 50 471 2850
Josefin Hoviniemi, Communications Manager, NEFCO
email@example.com, +358 10 6180 643
Allison Archambault, President, EarthSpark International
firstname.lastname@example.org, +1 202 270 2782
About EarthSpark International
EarthSpark International is a US-based not-for-profit organisation which operates in concert with its Haitian affiliate, Enèji Pwòp, S.A. EarthSpark’s proposal for mini-grid expansion was successfully shortlisted in 2017 by the GCF‘s USD 500 million Mobilising Funds at Scale Call for Proposals, which targeted small, private sector high impact investments to unlock private sector investments in climate change activity at scale.
About the Green Climate Fund
The Green Climate Fund (GCF), the world’s largest fund dedicated to climate finance, supports developing countries’ efforts to reduce their carbon emissions and adapt to climate change. Set up by the United Nations Framework Convention on Climate Change (UNFCCC) in 2010, GCF is an operating entity of the UNFCCC’s Financial Mechanism that also serves the Paris Agreement. GCF seeks to promote a paradigm shift to low-emission and climate-resilient development. Taking into account the needs of nations that are particularly vulnerable to climate change, GCF drives climate finance to where it is needed most: in the Least Developed Countries, Small Island Developing States, and African States.
Photo: Ash Sharma, NEFCO