Sustainable energy - a prioritised sector

Sustainable energy for all is an explicit goal in Agenda 2030. It is also a prioritised sector for Swedfund’s investments. Electrification drives development, and is essential for jobcreation and combating poverty.

”When we align investments and policies to achieve a low-emissions, climate resilient future, we open the way to a safer, healthier and more sustainable world for generations to come.” BAN KI MOON Former Secretary General, UN

Over 600 million people(1) in Sub-Saharan Africa live without electricity. Communities, schools and hospitals lack electricity. Businesses see inadequate electricity supplies as their greatest obstacle to development. Existing electricity networks are outdated and unstable. Alternative electricity from diesel-powered generators is also expensive and environmentally damaging.

SEK 200 million
The need for energy investment in developing countries is enormous. During 2016 alone, Swedfund has invested SEK 200 million in a range of energy projects based on wind, solar, hydro and geothermal energy. The bulk of this investment is made through ICCF (Interact Climate Change Facility), a facility financed by a large group of development finance institutions, including Swedfund. Through ICCF, Swedfund is also involved in the Lake Turkana Wind Power Project – Africa’s largest wind farm, and the single largest private investment in Kenya’s history.

Sector reforms
There are many technically feasible projects with excellent potential returns in the renewable energy sector, but few of them obtain full financing. The main reason for this is that there is a shortage of experienced developers who know how these projects should be structured, implemented and monitored. Recognising this problem, the necessary sector reforms are being carried out with the support of the World Bank, IFC and a number of development finance institutions, including Swedfund. We also have an impact on development by offering loan finance on longer terms than other investors do, in line with project needs.

DFI investments important
Swedfund and other development finance institutions are currently responsible for one third of all investment in renewable energy in Africa. Many of these countries possess wonderful natural resources. By using them to best advantage, we help create the conditions for these countries to build their own prosperity in a sustainable way. Renewable energy is a sector under - going massive development, both in technology and in the expansion of installed capacity. In our investment process, we investigate and analyse every project individually on the basis of our pillars: impact on society, sustainability and financial viability. At the end of the year, Swedfund had 5 investments in the energy sector. This is equivalent to around 9.9 percent of the total contracted amount in Swedfund’s portfolio.

Crucial to the climate
To reduce climate-damaging emissions and realise the global goals, continued investment in renewable energy is both obvious and crucial. This is where Swedfund and other development finance institutions have a central role to play. Over and above the partnership with ICCF, we work closely with players such as ElectriFI (electrifi.org) – an EU initiative focusing on renewable electricity projects in developing countries.

(1) Electricity Access Database, World Energy Outlook, International Energy Agency, 2011, worldenergyoutlook.org; World Development Indicators, World Bank Group, July 2014, worldbank.org.