This award recognises intermediaries that support and enable impact investing, including arrangers, accelerators, incubators, government departments, research & consulting firms, policy think-tanks or professional services companies that promote impact investments through thought leadership, project implementations and advisory work.
Africa GreenCo
About
Africa GreenCo “GreenCo”, operating through its subsidiaries in Zambia, Zimbabwe, South Africa and Namibia, is a pioneering intermediary in the renewable energy market in Southern Africa that creates opportunities for, and supports, impacting investing into this sector.
GreenCo’s model is designed to mitigate off-taker risks by purchasing power from independent power producers (IPPs) and selling this electricity to utilities and private sector commercial and industrial customers, as well as on the Southern African Power Pool (SAPP) markets.
By offering power purchase agreements backed by bankable AA- payment guarantees , GreenCo ensures payment security and catalyses private sector investment into such IPPs. GreenCo also uses its operational risk mitigation and access to competitive regional trading markets to diversify risks across a portfolio of buyers. This innovative approach transforms the traditional bilateral model into a dynamic multi-seller, multi-buyer model, mitigating risk across borders.
GreenCo’s operations increase both the supply of and demand for financing for renewable energy projects, thereby accelerating private capital mobilisation towards impactful and transformative capacity addition.
As an active member of the Southern African Power Pool (SAPP), GreenCo facilitates energy trades, extending its impact by enabling regional energy trading and diversifying the energy mix. This not only catalyses private capital but also serves as a catalyst for regional renewable energy integration, leveraging economies of scale to make renewable energy investments more attractive and viable.
The problem
Insufficient energy access has negative ramifications for systemic issues such as education and healthcare, and stunts economic development.
Across the 15 countries that make up the South Africa Development Community, less than a quarter of the population have access to electricity. In rural areas that number goes down to 5%. Africa GreenCo a private company with the support African governments, the private sector and international financial institutions is a dynamic new participant in the SAPP.
Renewable energy projects on the continent tend to be associated with high levels of credit risk and significant costs of generation, constraining the flow of private sector finance for the sector.
This puts African governments in a position of having to take on heavy contingent liabilities to secure individual energy projects.
A unique model
GreenCo’s multi-buyer and multi-seller model is the first of its kind in sub-Saharan Africa.
It takes a systemic view of market risk that reflects the real challenges to successful IPP procurement, where guarantees and fiscal interventions have fallen short.
To ensure GreenCo’s credibility, and so that it can meet its commitments to the generator and their lenders, GreenCo allocates a collateralised liquidity buffer to the IPP to fund any difference between the net revenue achieved from power sales and the applicable PPA payments. The liquidity buffer is guaranteed by a AA- credit rated GuarantCo This mechanism enables GreenCo to sell power directly to the market or to larger consumers in the event of a buyer’s default, ensuring the IPPs are financially protected.
Furthermore, GreenCo’s active role in the SAPP as a registered market participant since October 2021 enables it to trade power as a risk mitigation measure and offer additional services to IPPs, utilities and its customers. Its subsidiary presence in Namibia, South Africa, Zambia, and Zimbabwe also enables a clear understanding of regional market intricacies and the ability to design tailored solutions that resonate with each market context.
GreenCo is a distinct presence in the SAPP market, serving as the first non-asset owning trader in a market largely dominated by state utilities.
From strength to strength
GreenCo has steadily built its financial foundations, beginning with initial support through grants from key sustainability focused organisations such as the SADC Project Preparation Development Facility, the Rockefeller Foundation, Convergence, and P4G. These grants were pivotal in establishing GreenCo’s operations and credibility within the renewable energy sector.
In October 2020, GreenCo achieved a significant milestone by securing its first equityinvestments totalling $1.5m from InfraCo Africa and IFU.
These funds were instrumental in backing an initial portfolio of projects, setting the stage for future operations.
2022 saw an infusion of an additional $10m from the same investors, enabling GreenCo to expand its project portfolio and solidify its operational track record.
GreenCo recently signed a $27m guarantee facility with a AA- internationally credit rated GuarantCo, which will issue guarantees to IPPs from whom GreenCo purchases power. This not only enhances GreenCo’s payment reliability and creditworthiness to IPPs but also leverages GuarantCo’s robust credit ratings to increase project bankability and attract further investment into renewable energy generation in Southern Africa. This guarantee, with the potential to expand to $50m, represents a strategic financial instrument designed to scale GreenCo’s impact and foster growth in the region’s sustainable energy landscape. GreenCo’s current IPP pipeline across its countries of operation is sized at 7,000 MW of interest by IPPs via its online procurement portal showcasing immense potential for growth and scale.
Addressing challenges
Funding innovative energy projects is inherently a high-risk endeavour, which makes it necessary for GreenCo to employ robust and proactive risk mitigation strategies.
GreenCo’s proactive approach to risk mitigation includes establishing strategic partnerships and collaborations with DFIs and local stakeholders, such as governments and financial institutions, to facilitate replication of their model at scale.
To combat the significant challenge of navigating regulatory differences and policy frameworks in new markets, GreenCo employs a phased approach to expansion, prioritising markets that host favourable regulatory environments and potential partners.
Establishing local subsidiaries equipped to address specific market nuances has also proved beneficial.
Impact
GreenCo employs a robust monitoring and evaluation (M&E) framework to ensure the long-term sustainability and effectiveness of its impact. This framework is anchored by the iMetric data platform, which enables the continuous tracking of key performance indicators linked to the SDGs. GreenCo’s M&E process involves:
- Data collection and analysis: GreenCo gathers operational data on renewable energy generation, emissions reduction, employment creation, and economic activity generated by projects like Ilute Solar PV.
- Performance tracking: GreenCo tracks progress against predefined targets, such as emissions reduction, energy produced and jobs created. It evaluates the efficiency and effectiveness of each project through economic value-added assessments and environmental impact calculations.
- Stakeholder engagement: Continuous dialogue with governments and investors is maintained to ensure alignment with needs and priorities, reinforcing the relevance and adoption of initiatives.
- Adaptive management: Based on M&E findings, GreenCo adjusts strategies and interventions to enhance outcomes and address emerging challenges, showcasing a commitment to continuous improvement.
- Regular reporting: GreenCo provides transparent and regular reports to stakeholders and investors, enabling informed decision-making and fostering accountability.
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