Overview
The P-REC Aggregation Facility (PAF) is envisioned to be a USD 11 million pilot project finance facility that mobilizes capital for solar and hydro mini-grid projects across 14 fragile countries in Sub-Saharan Africa through the origination, aggregation and sale of Peace Renewable Energy Certificates (P-RECs). P-RECs are high-quality International Renewable Energy Certificates (I-RECs) generated from projects in fragile, climate-vulnerable, energy-poor countries and are sold at a premium compared with traditional environmental attribute certificates due to their high social and economic additionality. PAF will provide upfront capital to local project developers to help unlock follow-on investment into impactful off-grid energy projects in underserved markets, then monetize P-RECs generated through these projects via sales to corporate buyers.
PAF is a partnership between Energy Peace Partners and Camco, a climate and impact fund manager. The pilot facility aims to prove the market gap and make the case for a scalable, high impact I-REC aggregation facility.
Problem
Access to affordable and clean energy remains a significant challenge across Sub-Saharan Africa, particularly in states that are also climate-vulnerable and conflict affected. Conflict and political instability affect direct foreign investment flows, causing local project developers to struggle to secure financing and thus hindering the expansion of renewable energy solutions that can mitigate climate change and drive economic growth.
Corporate clean energy buyers have played an important role in supporting the financing of clean energy projects across the globe by procuring the energy attribute certificates, which deliver additional revenues to clean energy projects on top of the electricity sales, to achieve the clean energy and emission reduction goals. However, until recently buyers have not had readily available procurement options in sub-Saharan Africa. The current corporate sustainability system can also disincentivize procurement in sub-Saharan Africa since most multinationals have a small operational footprint there. Corporate buyers require additional incentives and/or impact-related benefits—ranging from decarbonization impact to job creation, improved health outcomes and enhanced energy access for underserved communities—to make a stronger case to support projects in the region and simplify transactions.
Solution
PAF addresses these challenges by aggregating and monetizing P-RECs, a unique type of renewable energy credit that captures both the renewable energy attributes and the social and peace impacts of clean energy projects. By providing upfront capital to project developers, PAF helps de-risk investments and enables the deployment of renewable energy solutions in underserved regions. PAF also simplifies P-REC transactions for developers and buyers by serving as the single hub into which developers sell their P-RECs and from which buyers procure most P-RECs. As more corporate buyers purchase P-RECs to support projects that align with their sustainability and ESG goals, this delivers catalytic capital and high-impact benefits to local communities. PAF's approach ensures that clean energy projects are financially viable, scalable and capable of attracting new sources of private capital.
CC Facility support
The CC Facility is helping PAF to refine its go-to-market strategy to enhance corporate demand, as well as supporting financial structuring and impact and environmental and social (E&S) policy design and bolstering financial monitoring and reporting. The CCF Facility will further assist PAF in expanding and refining its policies and frameworks (including gender) in anticipation of a larger, scaled up facility. The CC Facility’s support will enable PAF to reach financial close sooner, mobilize more capital, expand its portfolio of renewable energy projects, and deliver measurable E&S benefits.
Websites
Energy Peace Partners - https://www.energypeacepartners.com/
Camco- https://www.camco.fm/