EC plans renewable energy risk fund
The EC is planning a new venture capital fund, with an initial contribution of E80m over the next four years, which will focus on providing risk capital to investments below E10m as these are mostly ignored by commercial investors and internationa...
By Sudeshna Sen, TNN |
LONDON: It’s the new buzzword in the West. Developed nations are coming alive to the real prospect that countries like India and China, with their booming growth and energy needs, look set to chart the global energy course of the next quarter century. And sustainable energy has now become a key concern at the highest levels.
The European Commission (EC) is planning a new venture capital fund, with an initial contribution of E80m over the next four years, which will focus on providing risk capital to investments below E10m as these are mostly ignored by commercial investors and international finance institutions.
Corporate finance will be offered to support small and medium-sized enterprises as well as project finance. The Global Energy Efficiency and Renewable Energy Fund (GEEREF) will work through sub-funds for ‘economies in transition’, across Asia, Africa, Latin America and the Caribbean and Pacific region.
The Commission expects total initial funding from public and commercial sources of E100m, and this is expected to mobilise additional risk capital of at least E300m and possibly up to E1bn in the longer term. This means that it will contribute to the financing of investment projects of a value up to E1bn.
The Commission has appointed Triodos International Fund Management b.v. in conjunction with E+Co, to facilitate the implementation of the GEEREF in close co-operation with the European Investment Bank and the European Bank for Reconstruction and Development among others.
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The fund plans to invest in a broad mix of energy efficiency and renewable energy technologies, with priority on environmentally sound technologies with a proven technical track record. The idea is to mobilise private investment in energy efficiency and renewable energy projects in developing countries and economies in transition. GEEREF will be a fund of funds, and stimulate the creation of regional sub-funds tailored to regional needs & conditions, rather than investing in projects directly. Environment Commissioner Stavros Dimas said: “This is an innovative mechanism. It will contribute to bringing clean, secure & affordable energy supplies to the 1.6bn people around the world who have no access to electricity.
Development Commissioner Louis Michel emphasised that “the lack of access to energy is a major obstacle for regions that already experience problems in accessing capital. This fund can mobilise private investments and become a real source of development.”
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