An Interview with Nordic Development Fund, a new Efficiency for Access Donor Member
By Sarah Hambly, Partnership and Communications Manager and Eleanor Wagner, Marketing Communications Executive, Energy Saving Trust, Co-Secretariat of Efficiency for Access
Earlier this year, we were delighted to welcome Nordic Development Fund as a donor member of Efficiency for Access. Nordic Development Fund (NDF) is the joint Nordic international finance institution that focuses on connections between climate and development in lower income countries and countries in fragile situations. One notable initiative is the Energy and Environment Partnership Trust Fund (EEP Africa). It is a clean energy financing facility hosted and managed by NDF with funding from Austria, Finland and NDF. EEP Africa is working towards a climate-resilient, zero-carbon future that contributes to the Paris Agreement and the Sustainable Development Goals (SDGs).
In this interview, Leena Klossner, Deputy Managing Director, Head of Business Development and Outreach and Jussi Viding, EEP Africa Fund Manager, Nordic Development Fund, discuss how NDF help to accelerate clean energy access in low to middle income countries
1. How is NDF helping to accelerate clean energy access in low to middle income countries?
In April 2020, NDF launched its Strategy 2025, which states that at least 60% of our financing will be targeted towards Sub-Saharan Africa. Special efforts will also be made to further engage with the least developed countries and countries in fragile situations. Furthermore, another target is to direct at least 50% of our financing towards adaptation projects. According to the recent EEP Africa study, Energising Resilience, access to clean energy can help communities adapt and build resilience in the face of a changing climate.
NDF supports acceleration of clean energy access through multiple channels. For example, we invest in various funds and programmes promoting clean energy access, such as the Facility for Energy Inclusion Off-Grid Energy Access Fund (FEI-OGEF) and the Sustainable Energy Fund for Africa (SEFA), both in partnership with the African Development Bank among others. In addition to strategy alignment, a key selection criterion in the identification of investments is the value that NDF can add. The most important aspects are NDF’s capacity to provide flexible finance for early-stage design and structures, and catalytic finance for launch and scale.
2. What are some great examples of organisations in your portfolio that are working to create affordable, high-performing, and inclusive appliances and technologies that are powered by renewable energy sources?
One of our notable initiatives in this respect is EEP Africa, , a multi-donor fund that we host and manage, and which receives funding from ADA[KM1] [KM2] , MFA of Finland and NDF. EEP Africa has been a driver of the clean energy transition in Africa since 2010, investing over EUR 50 million in 274 pioneering projects across 15 countries. More than half of the companies in the current active portfolio are promoting efficient appliances powered by renewable energy.
The most prominent theme in EEP Africa’s portfolio is appliances that can help improve agricultural productivity and food value chains. For example, our grantees, Celfre, Wala and SunCulture, are all providing solar water pumps and irrigation solutions. Agsol is piloting solar mills and OVO Solar and Clamore Solar have created solar-powered egg incubators. EEP Africa also supports companies that are supplying refrigeration and cold storage solutions, such as SokoFresh, OneLamp and ENdep.
Another interesting group of companies is piloting new distribution models and asset financing platforms. EnerGrow, Pawame and Solar Sister all offer a wide range of appliances for households and small businesses. Their innovation is in last-mile distribution through networks of local entrepreneurs or technology-enabled credit programs that enable soft loans for low-income consumers.
A number of the solar home systems companies are also diversifying their product offerings. For example, Solar Works! has introduced a solar sewing machine and Zonful added phones, TV screens and digital packages to help its customers adapt to remote schooling. Cookstoves are also increasingly being sold in packages together with lighting and home appliances.
Similarly, we can see that micro-grid and mini-grid companies are diversifying their offerings. Examples include Devergy is selling refrigerators in areas where it has built a solar micro-grid, and OnePower, which is planning to create women-led productive use of energy (PUE) companies to sell appliances and equipment in connection with its mini-grids. Empowering Villages is focused on bringing electric pressure cookers (EPCs) to areas that are powered by a mini-grid.
Finally, e-mobility is one of the most exciting technologies that is emerging in EEP Africa’s portfolio. A variety of electric vehicles and renewable energy charging stations are being developed in Africa, which have the potential for transformational impact in pollution and climate resilience. They also offer farmers and small businesses a clean transportation option to bring their products to off-grid customers and markets.
3. How can the international community work together to address the barriers to growth that exist within the nascent market for appliances for communities in developing countries?
A continuum of financing and support is needed to promote the usage of energy efficient appliances in developing countries. Simply distributing existing appliances to rural communities is insufficient and can even increase e-waste in countries that cannot dispose of technologies safely and effectively
The international donor community needs to collaborate more to ensure an efficient and timely exchange of knowledge that can, in turn, help to direct limited resources more efficiently to relevant stages of market development. This includes support for pre-distribution work on research and development, on-the-ground testing, consumer education and awareness raising. Initiatives such as the Global LEAP Awards, NGOs such as CLASP and initiatives such as Efficiency for Access, for which CLASP and Energy Saving Trust are co-secretariat, play an important role in this stage. Following this, an early-stage grant fund like EEP Africa can come in and support projects that pilot technologies or business models and demonstrate market demand in a certain country or region. Once a product or distributor has achieved proof of concept, impact investors are then needed to support companies to scale up and commercialise their offerings
Throughout all stages, local and national authorities play an important role in creating an enabling environment. Industry associations such as GOGLA, regional bodies such as SACREEE and EACREEE, and international forums like the upcoming COP26 are places where policy makers need to share best practices on issues that can help or hinder the uptake of clean energy solutions.
4. NDF has recently joined Efficiency for Access as a Donor member. Why are you excited to be a member of Efficiency for Access?
As a joint climate and development finance institution of the five Nordic governments, NDF is dedicated to a collaborative approach to climate financing. Clean energy solutions, including promotion of efficient appliances, fits well within NDF’s mandate. Partnerships are key to our approach in order to leverage our resources and experience beyond the scope of what we alone can accomplish. EEP Africa, which we host and manage, was already an Efficiency for Access Programme Partner. Having now joined the Donor Coalition, we are looking forward to exchanging lessons learned and collaborating with other donor members on shaping the development finance agenda and generating maximum impact.
