Global Energy Efficiency and Renewable Energy Fund

Contents
1 Summary
2 Graphs and statistics
3 Basic description
4 Fund Governance
5 Relationship with Official Development Assistance

Summary

The Global Energy Efficiency and Renewable Energy Fund (GEEREF) was proposed in 2006 by the European Commission. It is a Public-Private Partnership (PPP) designed to maximise the leverage of public funds. Structured as a Fund-of-Funds, GEEREF invests in private equity funds (sub-funds) that specialise in providing equity finance to small and medium-sized project developers and enterprises (SMEs). Energy efficiency and renewable energy projects will be implemented in developing countries and economies in transition.

Graphs and statistics

Basic description

Name of Fund	The Global Energy Efficiency and Renewable Energy Fund (GEEREF)
Date created	Date fund proposed: Proposed by the European Commission in October 2006. It was publicly announced at the Global Climate Conference in Bali in December 2007. Date fund made operational: November 2008.
Administrating organisation	The fund is administered by the European Investment Bank (EIB) through a fund management team from the European Investment Fund (EIF).
Objectives	Obtain benefits from accelerated deployment of energy efficiency and renewable energy technologies. Achieve high leverage of public finance by offering preferential returns to private funds. Achieve high degree of financial sustainability.
Activities supported	The majority of the Fund will be used to provide risk capital to different types of sub-fund investments. In addition, the fund will include a technical assistance facility. This will amount to 10%-20% of the total fund size depending on the actual needs for capacity building which is likely to be larger in less developed economies. The investment will include a broad mix of project types promoting energy efficiency and renewable energy technologies. Given the focus on developing countries and transitions economies, the emphasis will be placed on deploying technologies with a proven technical track record. Part of investment comprises: Small hydro and biomass with on-shore wind also offering significant potential. Cofiring solutions (e.g. co-firing coal and bagasse) Manufacturing, energy service, trading and micro finance ventures Photovoltaics only for middle and high-income contexts because too costly.
Conditions and eligibility requirements	Focus on project funding in countries that have private sector engagement in their national policies. Furthermore projects that have a budget under EUR 10 million are prioritized since these are often disregarded by private investors. Sub-funds that are eligible for GEEREF financing could be envisaged for the African, Caribbean and Pacific (ACP) region, North Africa, non-EU Eastern Europe, Latin America and Asia, with a prevailing geographical focus on ACP countries. The projects have to be placed in a country eligible for Overseas Development Assistance (ODA).
Proposed life of fund	15 years after the initial closing date: 6 November 2008.
Further information	1. Key elements of the European Commission Initiative http://ec.europa.eu/environment/climat/pdf/key_elements.pdf 2. European Commission: Environment http://ec.europa.eu/environment/jrec/energy_fund_en.htm 3. Communication from the Commission to the Council and the European Parliament: Impact Assessment http://ec.europa.eu/environment/jrec/pdf/ia_2006_en.pdf 4. European Investment Fund:Information about how the GEEREF http://www.eif.org/who_we_are/geeref.htm?lang=-en 5. GEEREF's Website http://www.geeref.eu

Fund Governance

Decision-making structure for fund disbursement

The main architect of this fund is the European Commission. It is structured by the EIF and managed jointly by EIF and EIB.

The EIB provides professional advice on the design of the Fund.

The GEEREF Investment Committee (EC, GE, NO) will take investment decisions and three categories of Sub-funds will be invested in:

High-Risk: targeting projects and SMEs in Least Developed Countries and/or small scale projects and SMEs. (Share of GEEREF Portfolio: 30%).
Medium-Risk: focusing on medium and large renewable energy and energy efficiency projects in middle-income developing countries. (Share of GEEREF Portfolio: 50%).
Low-Risk: targeting medium and large scale renewable energy and energy efficiency projects in emerging economies, economies in transition and economies with limited availability of risk capital. (Share of GEEREF Portfolio: 20%).

These sub-funds are run on a private basis but with funding from GEEREF which leverages additional funding. The Investment Committee and the Board of Directors require that certain conditions are satisfied before they are prepared to release funds to a sub fund.

Consultations with non-government stakeholders

As the Fund is based on a Public-Private Partnership, fund management companies, financial institutions, project developers or individuals that intend to develop a clean energy investment fund or intend to expand an existing fund into the clean energy sector are welcomed to propose their plans for sub-funds. Developers of clean energy projects in one or more countries are also invited to propose their plans as a basis for a clean energy investment fund.

Proposals are expected to meet the following indicative criteria:

Financially sustainable business plan generating a fair return for investors.
Specified environmental and socio-economic impacts.
Focus on small and medium sized clean energy projects (< 30MW) and companies.
Requiring long-term patient investment capital.
Locally grounded, professional fund management team, preferable with a track record in the clean, energy sector, or at least the capacity to become qualified or to liaise with other parties for that purpose.

Realistic pipeline that gives evidence of the viability of the business plan.

How fund disbursement is reported

An in-depth evaluation will be carried out no later than 5 years and 10 years following the first disbursement from the European Community budget. The evaluation will be carried out by an independent body, and will be contracted and appointed by the European Commission (in consultation with other donors and investors). Given that this is a new approach, the Commission services will continue to develop the detailed implementing arrangement together with the fund management team, the EIB and the EBRD, and others that express a formal interest in co-financing this initiative. Member States and the European Parliament will be kept fully informed of the development of this initiative.

Issues raised by the public

There are concerns, raised by the Commission, that projects to promote energy efficiency and renewable energy find it hard to attract commercial capital. The problems arising are complex and mostly to do with a lack of venture capital. Venture capital is traditionally seen as a major guarantee for lenders. The venture capital requirement of developing countries and economies in transition is put at over €9 billion, way above current levels.

Concorde raises the issue that GEEREF supports a lot of technical assistance with a generalised recourse to European consultancies and little involvement of and support to ACP human resources and capacities.

Relationship with Official Development Assistance

Is donor funding considered part of official development assistance?	Yes. The GEEREF is registered as ODA by the OECD Development Assistance Committee (DAC). EC contributions will be reported in the annual development assistance committee (DAC) co-operation report (Commission Staff Working Document).
Financial instrument/ delivery mechanism used (e.g. grant, loan)	Private equity and grants.
Nature of recipient country involvement	There is currently little specific information available on the amount and the form of recipient country involvement. Countries with energy efficiency and renewable energy policies are asked to be conducive to private sector engagement. In general terms GEEREF aims to tailor projects to the specific needs of the poorest regions of developing countries and the aim of attracting private companies (western and local) to be involved in renewable energy projects. There is also one reference to the use of “local expertise”.
Overall consistency with the aid effectiveness agenda (i.e. the Paris Declaration)	Two elements are in line with the Paris Declaration: the focus on targeting specific goals, such as bringing 1 Gigawatt of clean energy capacity to developing countries markets, and mutual accountability as donors and partners are accountable for development results.