Stable electricity supply drives development and is essential for job-creation and combating poverty. It also links to Agenda 2030 and the goal of sustainable energy for all. We and other development finance institutions are currently responsible for one-third of all investment in renewable energy in Africa, which make our role vital.1 By investing in systems which make it possible for solar, wind or hydro power to be used to generate electricity, we are helping to create conditions for countries to build their own prosperity in a sustainable way. The lack of access to electricity is an obstacle to development in many poor countries. In Sub-Saharan Africa, over 600 million people live without electricity.2
The lack of electricity is an obstacle for business and business development, and essential social functions such as schools and hospitals cannot fulfil their missions properly due to the lack of electricity. Over and above the scarcity of production resources, existing electricity networks are outdated and unstable. Alternative electricity is often produced using diesel generators, which is both expensive and environmentally harmful. But these obstacles also represent an opportunity, since they open the way for new, innovative, modern and costeffective solutions. Countries and companies can, quite simply, make a development leap straight to renewable energy solutions, without going through an intermediate stage of fossil-fuel based energy.
It is vital to attract private capital for investments. The key to succeed is often to implement radical sector reforms. Without this, even commercially viable projects are at risk of not being implemented. Those in power in many developing countries have recognised the problem and have begun to implement necessary sector reforms with the support of the World Bank, the IFC and a number of development finance institutions, and this paves the way for private investors.
Swedfund supports this development by investing in commercially sustainable projects which have the potential to increase the proportion of the production and distribution of electricity provided by renewable sources.
We also promote development by offering loan finance on longer terms than private investors do. In this way, we make it possible for projects that are profitable in the long-term to be realised.
Crucial to the climate
A precondition for achieving the global goals and the Paris Agreement is international collaboration with other development finance institutions. Over and above the partnership with ICCF, we work closely with players such as ElectriFI (electrifi.org) – a company which is owned by EDFI and financed by the EU. This is an initiative which focuses on renewable electrification in developing countries – and falls within the framework for individual investments.
Renewable energy is a sector undergoing massive development, both in technology and in the expansion of installed capacity. At the turn of the year, Swedfund had seven investments including fund and platform investments, which have a significant number of underlying projects in the energy sector. In Swedfund's new strategy, the energy sector has been expanded so that, over and above investment in renewable energy we are also embracing broader climate investment such as in energy efficiency and projects involving water and sanitation.
1 Investing to Create Jobs, Boost Growth and Fight Poverty. EDFI Flagship Report 2016. Page 22.
2 https://www.iea.org/access2017/#section-1-2. Energy Access Outlook 2017, IEA. Downloaded 12 march 2018