Financial Aggregation for Distributed Renewable Energy

A Report Series by UNDP's Climate Aggregation Platform​

Developed under UNDP's Climate Aggregation Platform, this report series seeks to demystify financial aggregation and raise awareness about its potential to enable investments in Distributed Renewable Energy (DRE) in East Africa and help address the energy access financing gap. 
 

Launched on the United Nations first International Day of Clean Energy, the series explores the nuances of each market and offers strategic insights for advancing financial aggregation in the DRE sector. It aims to advance our understanding of the key precursors of financial aggregation and the readiness of different sub-sectors (off-grid solar, mini-grids, captive power, e-mobility) in the region, shedding light on the barriers that persist and the opportunities that exist in the market, and providing actionable recommendations to help unlock financial aggregation’s potential.  

 

UNDP’s Climate Aggregation Platform is a flagship initiative of the Sustainable Energy Hub and Climate Hub to support the structuring and deployment of innovative business models and financial mechanisms to accelerate energy access and a just energy transition. The CAP seeks to advance and raise awareness for innovative solutions to market barriers for financial aggregation in the small-scale, low-carbon energy sector, with the goal to increase access to low-cost financing for clean energy in emerging markets. 

 

Released on 12 March 2024
 

"By fostering innovative finance, we can increase the availability and reduce the cost of financing for clean energy, and ultimately, we can help make clean, reliable, and affordable energy accessible to everyone across East Africa and beyond."
Riad Meddeb, Director, Sustainable Energy Hub, UNDP
Financial Aggregation for Distributed Renewable Energy in East Africa

Developed under the UNDP Climate Aggregation Platform, this report examines the potential of financial aggregation for Distributed Renewable Energy (DRE) in East Africa. It analyzes key factors, barriers, and opportunities to enable capital deployment in different sub-sectors (off-grid solar, mini-grids, captive power, e-mobility). The report offers recommendations to unlock the potential market and achieve scalability. It serves as a reference for policymakers, investors, and stakeholders interested in innovative financial solutions to solve the SDG7 financing gap.

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Financial Aggregation for Distributed Renewable Energy in Uganda

To achieve universal energy access in Uganda by 2030, connecting 6.1 million additional customers requires a $5.5 billion investment in on-grid and off-grid systems. The distributed renewable energy (DRE) sector, crucial for this goal, remains underfunded. This country report explores financial aggregation as a solution to align funding needs with investor requirements. The report assesses Uganda's market readiness for DRE financial aggregation, addressing barriers and presenting an action plan. It serves as a reference for policymakers, investors, DRE companies, and development finance institutions, contributing insights from extensive research and interviews.

This work is the culmination of two years of collaboration and engagements between UNDP and a multitude of stakeholders in Uganda, most notably the Ministry of Energy and Mineral Development. The National Renewable Energy Platform (NREP) provided a launchpad for the Climate Aggregation Platform’s work in Uganda, enabling several events and workshops in the country.

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Financial Aggregation for Distributed Renewable Energy in Rwanda

Focusing on Rwanda, this country report assesses the financial challenges faced by the energy access sector and proposes financial aggregation, specifically the aggregation of distributed renewable energy (DRE) receivables, as a possible avenue.

The report advocates for the exploration of multi-jurisdictional financial aggregation, bundling DRE assets not only within Rwanda but also across East Africa, to attain the critical mass necessary for cost-effective transactions, and providing an opportunity for regional collaboration. Rwanda’s conducive business environment, its supportive tax legislation and the country’s ambitions to be a leader in green and sustainable finance provide a good starting point.

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Summary Report
The CAP Financial Innovation Challenge: A Summary Report of Seven Financial Innovations for Clean Energy in Africa

The "Financial Innovations for Clean Energy in Africa" summary report, part of the UNDP's Climate Aggregation Platform (CAP) report series published on January 26, 2024, provides an overview of the seven financial innovations that were competitively selected and supported by the CAP Innovation Challenge.

Highlighting seven cutting-edge financial models, the report showcases the CAP's efforts to foster the development of innovative financial models for DRE sector, to unlock new sources of capital and climate finance. These innovations aim to increase financing availability, reduce costs for clean energy projects, and ensure clean, reliable, and affordable energy access for all. The models target different sub-sectors, from off-grid and on-grid solar, mini-grids, productive use appliances and e-mobility to clean cooking and could be deployed across different countries in East Africa.

White Paper
Mainstreaming Financial Aggregation for Distributed Renewable Energy

As we reach the halfway mark towards the 2030 Sustainable Development Goals (SDGs) deadline, the urgency to address the energy crisis is more pronounced than ever. Despite progress towards SDG 7's targets for clean and affordable energy, with 675 million people still without electricity and 2.3 billion lacking access to clean cooking solutions, a significant acceleration in efforts is required. This White Paper is part of a report series, Financial Aggregation for Renewable Energy in East Africa, published by UNDP on 26 January 2024, the first International Day of Clean Energy. Designed as a follow-on piece to the 3-part series, it reiterates the critical role of Distributed Renewable Energy (DRE) in bridging these gaps and aligning with the Paris Agreement goals. It further unpacks the financial aggregation of DRE receivables as a promising approach to reconcile DRE funding needs with investor requirements, thereby enhancing capital deployment in the sector.

Developed under the Climate Aggregation Platform (CAP), a Global Environment Facility-funded project by UNDP, this paper aims to further demystify the process of structuring scalable DRE financial aggregation transactions. Through real-life examples and lessons from pioneering transactions, it seeks to equip stakeholders with the knowledge to navigate this complex field, highlighting the role of concessional funds and the potential for standardized practices to reduce costs and transaction times.
"Through this work we aim to spark a conversation about innovative climate finance; create synergies among stakeholders; inform new interventions; and ultimately help unlock new sources of capital for clean energy in emerging markets. Sustainable energy is a key enabler for achieving the SDGs and it is a central solution to address climate change.”
Cassie Flynn, Director, Climate Hub, UNDP



Additional resources:


Watch the Webinar presenting the key Findings from the Report seriesDownload the Presentation of the key Findings
 

The CAP is implemented by UNDP and funded by the Global Environment Facility.