Toronto, May 18, 2022 – Convergence awards a feasibility study grant to the United Nations Industrial Development Organization (UNIDO) as host of the Private Financing Advisory Network (PFAN), a global program that supports entrepreneurs in developing climate and clean energy projects. This grant will help PFAN develop a results-based financing fund to provide results-based financing to private distributed energy service companies (DESCOs), for co-financing and developing off-grid solar projects in Fiji. This grant is awarded through Convergence’s Indo-Pacific Design Funding Window, funded by the Australian Government.
Apart from the limited availability of unsustainable and expensive diesel-generated energy, existing electrification efforts in Fiji for remote communities have been largely concentrated on solar home systems, which are challenging to scale and often unable to meet the energy demands of the local communities. Solar mini and micro-grids offer a scalable and sustainable solution to cater to the unserved energy needs of these remote communities. However, there are limited solar off-grid systems in Fiji due to the lack of flexible financing options for DESCOs, which make it economically unviable for them to undertake projects due to the small project sizes and challenging demographics.
The grant will enable PFAN to explore the feasibility of structuring a funding mechanism for providing results based financing to DESCOs, who would contribute equity and secure external funding from investors to develop, own, and operate viable projects made up of a combination of solar mini and micro-grids along with solar home systems, to provide affordable and clean energy access, in some cases first-time energy access, to remote communities in Fiji. The funding mechanism, which will be designed together with the Fiji Rural Electrification Fund (FREF), would be complemented by a technical assistance facility which would be managed by PFAN and would aim to support DESCOs in project implementation and refining their business model.
“We are excited to move to the next stage of the Fund design and are grateful to Convergence and DFAT for making this possible” says Marko van Waveren Hogervorst, PFAN Partnership Manager at UNIDO. “This is an area where PFAN will be able to leverage from our experience and expertise in other markets, and we are looking forward to work on this with FREF and other partners to achieve 100% energy access in Fiji. Experience shows mechanisms such as this offer the opportunity to really get more out of development funding and achieve much greater scale more quickly as well as helping build the local renewable energy sector to support long-term sustainability”.
PFAN will be designing the fund based on a similar model successfully implemented in Africa by the Renewable Energy and Energy Efficiency Partnership (REEEP) that together with UNIDO hosts PFAN, and they will look to adapt it for the Pacific. PFAN’s partner FREF has previously completed a solar mini-grid pilot project in Fiji and will help develop new ownership models for the fund, awarding concessions to DESCOs and helping administer operations of the fund. FREF was constituted by the Government of Fiji under the auspices of the Ministry of Economy and mandated with completing the last mile electrification of Fiji’s remote maritime communities.
“We’re thrilled to be supporting the design and development of this fund, which uses blended finance to solve an enduring development challenge - bringing electricity access to remote communities. There’s a strong correlation between economic growth and access to stable electricity, which is why the potential of this design to be replicated across other difficult geographies was so attractive to us.” says Joan Larrea, CEO, Convergence.
The United Nations Industrial Development Organization (UNIDO) is a specialized agency of the United Nations that promotes industrial development, while adhering to the following four strategic objectives: creating shared prosperity, advancing economic competitiveness, safeguarding the environment, and strengthening knowledge and institutions. In the pursuit of its mission, UNIDO supports entrepreneurship and facilitates innovation in low- and middle-income countries, while also ensuring that this enhances their progress towards a low-carbon and climate resilient future.
PFAN is a global program comprising of a network of professionals that support entrepreneurs in developing climate and clean energy projects to mobilize financing from private sector investors. PFAN aims to achieve this by originating technically and commercially viable clean energy and climate adaptation projects, supporting their development through coaching provided by its network of in-country financing advisors and technical professionals and facilitating investment through its global investor network. The PFAN program is hosted by UNIDO and REEEP. For more information visit www.pfan.net.
About Convergence’s Design Funding Program
Convergence’s Design Funding Program operates as a market acceleration tool providing early-stage capital to support blended finance solutions in frontier markets and nascent sectors to accelerate the number of investible transactions in market targeting SDGs. The Indo-Pacific Design Funding Window, funded by the Australian Government, provides grant funding for the design and launch of catalytic blended finance solutions focused on climate finance and/or gender equality in certain countries in the Indo-Pacific region. Please visit Convergence’s Design Funding page for submission deadlines as well as other open windows.
Convergence is the global network for blended finance. On top of market acceleration through its Design Funding program, Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence’s global membership includes over 200 public, private, and philanthropic investors as well as sponsors of transactions and funds. To learn more, visit www.convergence.finance.
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