South Pole and NET AG, a Swiss energy consultancy, oversee the REPIC climate finance instrument– with backing from the Swiss Government – handling the sourcing, evaluation of projects while providing guidance to projects. The proven pilot instrument addresses the early development stage (pre-commercialisation phase). In 2022, the new REPIC Rollout instrument was launched, providing support for projects entering the early commercialisation phase.
Recently, the first three REPIC Rollout projects have been awarded funding support. Here, we take a look at the challenges of driving private investment into climate smart projects in the Global South and the three exciting new projects awarded funding.
The need for robust climate finance instruments in emerging economies has never been more critical. The 2023 World Energy Outlook by the International Energy Agency reveals a troubling gap: despite being home to two-thirds of the global population, emerging markets and developing economies receive only 15% of the total clean energy investments.
In a world where the consequences of climate change are increasingly being felt by communities and countries in the Global South – those least prepared to weather the storm despite contributing little to its causes – increasing levels of climate finance is now urgent.
Financial instruments and mechanisms like REPIC can address relevant hurdles to deploying climate finance in these countries.
The REPIC instrument serves as a vital bridge, empowering renewable energy, energy efficiency and resource efficiency projects in emerging economies. The innovative projects supported are transforming regions by bringing renewable energy storage solutions, clean drinking water, sustainable fishing and other resources to areas that lacked access before. This improves the lives and livelihoods of local communities.
Early-stage startups in developing countries, particularly those in rural areas, face many challenges when starting out due to a lack of stable infrastructure, high production costs and difficulty finding trained staff. REPIC aims to help climate-smart projects overcome these obstacles through exchanging knowledge and sharing technologies.
The first project supported by REPIC Rollout is Sustain Switzerland. Together with local partner Tanganyika Blue, this project is leading the way in smart technology for solar-powered, energy- and resource-efficient aquaculture in Tanzania. By partnering with the Swiss venture builder Sustain, REPIC is helping scale up a commercial fish farming operation based at Lake Tanganyika, while introducing more sustainable practices to the region.
Sustain aims to have a positive impact by integrating solar power into the aquaculture operation and implementing energy efficiency and resource efficiency practices. This helps to reduce production costs significantly and allows for the more efficient use of fish feed. In addition the project no longer relies on expensive and unstable electricity sources. This in turn decreases the risk for investors while also encouraging more private investments. Encouraging sustainable practices that reduce risk and attract private capital for a project like Sustain is what REPIC is all about.
Navigating towards a low-carbon economy means that businesses must adopt innovative solutions. The major barrier businesses, projects and governments face is the costs involved in research, development, and scaling proven new technologies. This cost can be substantial.
As a result, these startups need to receive financial support such as grants, early-stage equity and guarantees that eliminate substantial risks for any investors. This, in turn, successfully crowds in private capital. Switzerland's endorsement of the REPIC instrument serves as a good example of the impact that government-backed instruments and initiatives can have.
Early-stage ventures and projects in developing countries are perceived as very risky by private investors. REPIC steps in to finance the riskiest parts of these ventures' early development stages. This makes the project more appealing to private investors, unlocking investment and support for scaleable projects.
However, at least half of the costs for the projects in the REPIC Rollout must be covered by private investors. Our goal is to not only ensure that projects are supported through their lifetime. We go beyond by fostering relationships so that investors would consider follow-on investments for subsequent scale-up of the project.
The second project that REPIC Rollout is supporting is Openversum, a company that develops energy-efficient water filters in Colombia. Facing the challenging "valley of death" stage, during which many investors are hesitant to invest, REPIC stepped in and provided the much-needed capital to reduce the project's initial production costs.
REPIC also encourages projects to work with technology and know-how from Switzerland and helps apply these practices within the country and context where the project operates. For example, the third REPIC Rollout project, ASG International, develops an energy-efficient salt battery system, called SaliAfrica, tailored to the specific needs of the African market. The salt battery is a product developed in Switzerland by Innovenergy GmbH, a project partner. Through the exchange of this technology, the project aims to set up local manufacturing for SaliAfrica in Ghana and train local engineers in Ghana and Cameroon.
Moving to a net zero future presents challenges and opportunities that must spur innovation and create meaningful jobs. By supporting innovators and their novel products and processes, government-backed instruments such as REPIC, combined with private investments, play a critical role in accelerating progress towards a sustainable future in emerging markets.
Communities in the Global South bearing the brunt of climate impacts have the potential to create locally driven, clean, sustainable growth. REPIC enables this by providing finance, access to technology and knowledge sharing. Get in touch with our team if you would like to benefit from REPIC finance or become part of the change as an investor.
Learn more about South Pole's work with REPIC and how we're channeling climate finance to innovators in emerging economies
