finance

Access to low cost finance

Renewable energy projects in developing regions benefit from of strong local sources such as solar, wind, hydro and geothermal). At the same time, global investment in renewables exceeds all other new energy investments world-wide, leading to an increase in installed base and lowering the price for renewables year after year.

However strong this economic opportunity to developing regions, in many instances economy of scale is the only strategic response to overcome the increased cost of finance in these regions.  This imposes a strong emphasis on a guaranteed off-taker of the electricity, which rules out most population and small businesses to be the beneficiaries of electrification. More often it is large corporate industries that drive the development of large renewable energy plants, funded by foreign equity based financing.

Our main development guideline is zero risk for zero emission.

  • Technical risks are mitigated using performance guarantees from a global EPC contractor
  • Credit risks are mitigated using guarantee schemes involving the region’s national government as a counter party

A reduced and stable cost of electricity over 30 year  is a Unique Buying Reason for regions to develop their stable and sustainable future.  Renewable technologies add reliable, trusted and efficient electricity production to the energy mix of the country, while cash flow remain in the country to benefit local people in local micro-grid projects and electrification.

  1. The country owns and controls the renewable energy sites, which benefits from best-of-class performance guarantees.
  2. Financing is based on low cost debt.
  3. Little to no equity is used: no free cash flow drains into non-domestic dividends.
  4. Rural electrification is promoted using the free cash flow from renewable production sites.
  5. The cost of energy is close to a European level, while the renewable potential makes the region more competitive to reduce import and develop export.
  6. Education, care, local economy and employment grow from the projects and from the attraction of new business and developments.
  7. The trade balance improves: the economy grows while energy import reduces.
  8. The country owns and controls its renewable energy future in a sustainable way.

Local power from local energy

Our projects result in energy infrastructure that is controlled and operated by local government or their appointed entities.  Local government will own the projects directly or indirectly through vehicles (existing or new) owned by government.  This is how G&A and its financial and technical partners ensure that the low cost of finance and the strong performance guarantees come to benefit the local population. Minority stakes in the projects are eligible for reasons of community endorsement, local management, technical support and maintenance of the generation and access projects and/or the complementary programmes for sensibilisation, education and co-creation. An important role is for organisation that can develop local project rights and permits and can coordinate the development of sensibilisation, education and co-creation of Access projects.

  • Local governments or related entities become the owners of infrastructure.
  • Planning of generation projects fits the country’s agenda for renewable energy.
  • Planning and growth in access projects is community based.
  • Management, operation and maintenance of the infrastructure is (sub)contracted locally.

An engine for growth

Generation projects run on revenue from the sale of electricity to pay for the OPEX and the depreciation of CAPEX.  The projects result in sufficient free cash flow and a debt service reserve account to buffer variations in revenue.  The business plan covering CAPEX and OPEX leads to a self-supporting operation that generates renewable energy and provides free cash flow to fund Access projects and a community programme for sensibilisation, education and co-creation.

Access projects are funded using free cash flow from the generation projects and require a payback of CAPEX over less than 5 year.  Revenue in access projects comes from sale of energy, which can be paid form better efficiency and more growth.

  • Efficiency: savings in fuels.
    Small diesel generators operate at a cost up to 500€/MWh, renewable energy can be as low as 75€/MWh.
  • Growth: new economic activity.
    Local access to energy allows for new initiatives and small business the emerge (e.g. growing food for the local market using solar pumped irrigation)