Global Energy Efficiency and Renewable Energy Fund

Global Energy Efficiency and Renewable Energy Fund

Summary

The Global Energy Efficiency and Renewable Energy Fund (GEEREF) is a public-private partnership (PPP) designed to maximise the private finance leveraged through public funds funded by the European Commission and managed by the European Investment Bank (EIB). GEEREF is structured as a fund of funds, and invests in private equity sub-funds that specialise in financing small and medium-sized project developers and enterprises (SMEs) to implement energy efficiency and renewable energy projects in developing countries and economies in transition.

GEEREF NeXt, the successor fund to GEEREF, is currently under development.

Basic Description

Name of the Fund The Global Energy Efficiency and Renewable Energy Fund (GEEREF)
Official Fund Website http://www.geeref.com/
Date Created
Date fund proposed: 2006
Date fund made operational: 2008
Proposed Life of Fund The life span of GEEREF is supposed to be 15 years after the initial closing date, which was 6 November 2008. GEEREF reached the end of its investment period in May 2019 and is fully invested.

The successor fund to GEEREF, GEEREF NeXt, is under development. This new fund has been approved in April 2017 but the starting date remains to be disclosed. The expected ending date of GEEREF NeXt is 2033.

Objectives The GEEREF aims to:

  • 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.
Financial inputs and fund size GEEREF was launched in 2008 with funding from the European Union, Germany and Norway, for a total of EUR 112 million. The fund concluded its fundraising from private sector investors in 2015 with a capital of EUR 220 million.

The contributions from donor countries are included as Official Development Assistance (ODA).

Activities Supported GEEREF finance supports a broad mix of projects promoting energy efficiency and renewable energy technologies. It emphasises deployment of proven technologies including:

  1. Small hydro, biomass, on-shore wind, and co-firing solutions (e.g. co-firing coal and bagasse)
  2. Manufacturing, energy service, trading and micro finance ventures
  3. Photovoltaic.

The investment in sub-funds is targeted to be allocated as follows:

  • 30% of the portfolio will take on high risk by targeting projects and SMEs in Least Developed Countries and/or small-scale projects and SMEs.
  • 50% of the portfolio will take on medium risk by focusing on medium and large renewable energy and energy efficiency projects in middle-income countries.
  • 20% of the portfolio will have low risk investments by 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.

Administrating Organization

Secretariat or Administrative Unit The fund management team is attached to the European Investment Fund (EIF). It is composed of professionals from both the EIB and the EIF and a small administrative staff. GEEREF’s Head Office is based in Luxembourg.
Trustee European Investment Bank (EIB)

Fund Finance and Access Modalities

Conditions and Eligibility Requirements GEEREF focuses its project funding in countries that have private sector engagement in their national policies and appropriate policies and regulatory frameworks on energy efficiency and renewable energy.

Recipient countries must be eligible for ODA.

Accessing the Fund
Access Modalities – Fund management companies, financial institutions, project developers or individuals that intend to develop a clean energy investment fund or expand an existing fund into clean energy can seek finance.

Developers of clean energy and energy efficiency projects can submit proposals for investment funding. Proposals are expected to:

  • Present a financially sustainable business plan generating a fair return for investors and a realistic pipeline
  • Specify environmental and socio-economic impacts
  • Focus on small and medium sized clean energy projects (less than 30MW) and companies
  • Require long-term patient investment capital
  • Assemble a 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.
Financial Instruments – Private equity and grants including for technical assistance.
Accreditation process – As a fund of funds, GEEREF works with a number of private equity funds. There is no formal accreditation process. Instead, potential private equity fund partners are sought out by GEEREF.

GEEREF engages with funds early in their development and seeks to enhance strategy, team capability and structure, being often the first cornerstone investor in a fund. GEEREF funds typically have:

  • Strong technical and private equity transaction skills
  • A regional focus, an established local presence and networks to generate deal-flow
  • An overall size of between EUR 50 million and EUR 200 million.
Overview of implementing entities – As of the end of 2019, GEEREF had 15 funds, of which 14 were still active, in its portfolio across emerging markets in Africa, Asia and Latin America. The private equity funds with which GEEREF cooperates are:

  • Africa Renewable Energy Fund
  • Arch Africa Renewable Power Fund
  • Armstrong South East Asia Clean Energy Fund
  • Catalyst Mena Clean Energy Fund
  • Caucasus Clean Energy Fund
  • DI Frontier
  • Emerging Energy Latin America Fund II (liquidated)
  • Evolution II
  • Evolution One
  • Frontier II
  • MGM Sustainable Energy Fund
  • MGM Sustainable Energy Fund II
  • Renewable Energy Asia Fund
  • Renewable Energy Asia Fund II
  • Solararise.

Short descriptions of the funds can be found at: https://geeref.com/portfolio.html

Nature of recipient country involvement – No information is available on the scope of recipient country involvement.
Allocation criteria – GEEREF prioritises small to medium-sized projects (EUR 10 – 50 million) funded through private equity fund intermediaries.
Safeguards, Gender and Indigenous Peoples
Safeguards – Environmental and Social Management Systems (ESMS) are built within each fund’s management system to manage risks associated with projects and enhance positive outcomes. All projects are subject to the environmental and social safeguards of the EIB. The EIB Environmental and Social (ESS) Handbook presents the operational translation of those standards across ten thematic areas including pollution prevention, rights and interests of vulnerable groups or involuntary resettlement. Every year, GEEREF evaluates its programmes against those standards and reports the results in its Impact Report.
Gender – GEEREF adopts the EIB Groups’ Gender Strategy. This strategy is consistent with international agreements and reflects the principles set out in the European Commission’s Strategic Engagement for Gender Equality 2016-2019, the EU Gender Action Plan 2016-2020 and in the Sustainable Development Goals as well as in the Lima Work Programme on Gender of the United Nations Framework Convention on Climate Change (UNFCCC).
Indigenous Peoples – GEEREF requires its fund managers to respect the principles set out in EIB ESS Standard 7: “The standard requires that there is full respect for the dignity, human rights, aspiration, cultures and customary livelihoods of vulnerable groups including Indigenous People. It requires the free, prior and informed consent of affected indigenous groups”. In addition, the successor to GEEREF, GEEREF NeXt, will require for all investments with impacts on Indigenous Peoples to adopt an Indigenous Peoples Plan (IPP) which provides “guidance, key principles and processes, and other considerations related to the addressing issues of IPs”.

Fund Governance

Decision Making Structure GEEREF’s governance structure is composed of the Investment Committee, the Board of Directors, the EIF and the EIB.

Investment Committee
An Investment Committee representing GEEREF’s investors and advisors make the investment decisions. The committee is composed of three permanent and two expert members nominated by the public shareholders, and one independent member.

Board of Directors
The Board of Directors is responsible for all the aspects of administration and management of the Fund. It is composed of three directors appointed by the public investors and one independent director.

The European Investment Fund (EIF)
The EIF acts as the Advisor to the GEEREF Board and Investment Committee.

The European Investment Bank (EIB)
The EIB acts as the Sub-Advisor and is in charge of identifying and recommending investment opportunities to the Advisor as well as for providing ongoing portfolio monitoring.

Accountability Mechanisms GEEREF has an internal evaluation system described in its impact methodology. This methodology combines qualitative and quantitative assessments:

Qualitative EIB Standards
GEEREF requires its portfolio funds to “carry out social and environmental due diligence in their new projects, using EIB’s Environmental and Social Standards, and subsequently monitor the projects in compliance with the standards”.

Quantitative GEEREF Impact Metrics
GEEREF “measures and monitors quantifiable, realised impact on the ground on an annual basis to assess ESG performance, share results with investors and the wider investment community”. The impact indicators include:

  • Pillar 1 Clean Energy (installed capacity, electricity generated, energy efficiency savings)
  • Pillar 2 Environment/Climate Change (net emissions reduced)
  • Pillar 3 Sustainable Development (beneficiary households, beneficiary SMEs, number of people employed, training)
  • Pillar 4 Financial Leverage (fund multiplier, project multiplier).

The evaluation is conducted yearly and reported in GEEREF’s annual Impact Report.

To our knowledge, no independent evaluation has been done of GEEREF’s investments.

Participation of Observers and Stakeholders Stakeholders participate in GEEREF’s decision-making through the Board of Directors and Investment Committee which have members appointed by the public investors and the public shareholders.

No information is available with regards to the participation of observers. However, GEEREF is subject to EIB ESS Standard 10 that requires “promoters to uphold an open, transparent and accountable dialogue with all project-affected communities and relevant stakeholders in an effective and appropriate manner… The right to access to remedy, including through grievance resolution, is actively required”.

Transparency and Information Disclosure Donor contributions are partially disclosed on the GEEREF website. Given the GEEREF’s partnership with private equity funds, there is no disclosure of individual project information nor disclosure of relevant project documents. The GEEREF website reports on aggregate investments on the portfolio level (no information on investments at the sub-fund level is accessible) and publishes its Impact Report, annually, with limited information disclosed.
Other Issues Raised The European Commission has raised concerns that it has been hard to find bankable projects that promote energy efficiency and renewable energy, and a need for venture capital.

European NGOs have raised concerns about the need for more transparency about the operations of the fund and the need for more technical assistance support to benefit organisations absent in recipient countries.