About
In recent years, many developing countries have established supportive regulatory frameworks for private investment in renewable energy projects. However, finance for these projects remains a challenge: Projects can fail or face severe delays due to lack of expertise and prolonged negotiations with financiers; because renewable energy projects involve high amounts of capital expenditure, debt costs at construction can have a disproportionate effect on their financial viability; and finally, attracting new investors remains a challenge.
Climate Investor One, proposed by the Netherlands Development Finance Company FMO, addresses these challenges by combining three innovative investment facilities into one to finance projects in the wind, solar and hydro sectors.
Climate Investor One supports these projects through several stages of a projects’ life to ensure projects get off the ground and attract new investors. It provides technical, environmental and social due diligence support at an early-stage. It then cuts out complex negotiations with multiple providers by financing a large part of construction costs with equity, removing the need for more costly debt finance. Finally, Climate Investor One will unlock new capital through a pooled refinance fund that may be appealing to institutional investors.
In June 2017, Climate Investor One announced first close at USD 412 million, receiving support from the Directorate-General for International Cooperation (DGIS), Ministry of Foreign Affairs of the Netherlands), Atradius Dutch State Business, De Nederlandse Waterschapsbank N.V. (NWB Bank), Aegon Asset Management and FMO – all from the Netherlands – together with global partners from Norway (KLP), South Africa (Sanlam Investments Holdings) & the UK (Royal Borough of Windsor & Maidenhead Pension Fund).
In a pilot, Climate Investor One would finance nine projects to deploy 300 MW of renewable energy capacity and reduce 600ktCO2 emission per year. Due to the combination of the financing facilities, these projects would be built for 7-21% less capital than a typical project, a significant reduction in costs, with clean energy provided at 9-18% lower cost to consumers in developing countries.
FACILITY DESIGN
Climate Investor One focuses on financing projects in low and lower middle income countries in the wind, solar, and hydro sectors with an average size of 25-75 MW or USD 80-100m in total investment cost. Climate Investor One consists of three stages:
A Development Fund funded by non-repayable donor contributions would finance up to 50% of development costs for projects by private sector developers. Its specific aim would be to improve projects’ bankability from an early stage, which would include activities that projects often struggle to complete for lack of finance, such as help securing land titles and permits, concluding a power purchase agreement, conducting an environmental and social impact assessment, and reaching financial close by securing 100% of investment costs. The donor capital used to fund this stage would be converted to equity stakes for successful projects that would in turn be bought out by the Construction Finance Facility at commercial rates. In this way, the Development Facility would be an evergreen facility, recycling the returns made from the construction finance facility buy-outs to fund the development of subsequent new projects.
A Construction Fund would provide up to 75% of investment costs on commercial terms to projects. It would be funded by three different tiers representing different risk/return positions: A $100m Tier 1 donor tranche to cover potential losses; a $200m Tier 2 subordinate tranche taken up by DFIs and potentially PE/commercial investors ; and a $200m Tier 3 senior tranche taken up by commercial investors comfortable with construction risks (approx. 13 year 8% notes). Because such a facility would reduce both the complexity and development time with fewer financiers for project developers to negotiate with, it could also reduce the overall cost of financing and project development.
A Re-financing Fund would have right of first refusal on up to 50% of the long-term refinanced debt of derisked projects after they enter commercial operation. The price for re-financing would be set by the other 50% of external investors and local banks. The Refinancing Facility would consist of investors seeking long-term de-risked infrastructure debt, and in this way, attract a new tranche of investors to clean energy in developing countries.
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Impact
In a pilot, Climate Investor One would finance nine projects to deploy 300 MW of renewable energy capacity and reduce 600ktCO2 emission per year. Due to the combination of the financing facilities, these projects would be built for 7-21% less capital than a typical project, a significant reduction in costs, with clean energy provided at 9-18% lower cost to consumers in developing countries.
In June 2017, Climate Investor One announced first close at USD 412 million. It will mobilize at least USD 2 billion in new private finance out to 2020, while lowering the cost of clean electricity to consumers in developing countries.
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News & Events
2015 Lab proponent Climate Fund Managers announces the second close of its Climate Investor Two fund at USD 855 million
December 7, 20222015 Lab proponent Climate Fund Managers, the fund manager of the innovative blended finance facility Climate Investor Two (CI2), announces the second close at USD 855 million. The second close increases the facility by an additional ca. USD 180 million. Climate Investor Two (CI2) is Climate Fund Managers’ (CFM) second climate-focused, blended finance initiative following […]
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Impact Alpha: Climate Fund Managers raises USD 675 million for green blended finance fund
November 19, 20212015 Lab proponent Climate Fund Manager (CFM) has announced the first close of Climate Investor Two at USD 675 million. It is CFM’s second climate-focused, blended finance initiative following the establishment of its first initiative: Climate Investor One (CI1), which was developed under the Lab program. From the official announcement: With a USD 1 billion […]
UPC Renewables North Africa and CIO Partner to Develop the Sidi Mansour Wind Farm in Tunisia
June 9, 2020Climate Investor One (CIO), endorsed by the Lab in 2015, has partnered with UPC Renewables (UPC) for the Development of a 30 MW Windfarm in Tunisia. This Windfarm will provide a proof of concept and support for Tunisia’s NDC target of having 30% reliance on Renewable Energy by 2030. Read the full press release from […]
Climate Investor One, 2015 Lab instrument, reaches final close at USD 850 million
June 21, 2019Climate Fund Managers today announced the final close of the Climate Investor One Stichting Development Fund and Coöperatief Construction Equity Fund U.A. at a combined USD 850 million. The fund focuses on financing for renewable energy in emerging markets and estimates it will support renewable energy delivery to 13 million people. The fund model was […]
2015 Lab proponents win tender to manage €160 million Dutch Fund for Climate and Development
May 23, 2019The proponents behind 2015 Lab instrument Climate Investor One have announced a new commitment that will kick off a blended finance instrument for much-needed water, oceans, & sanitation financing in developing countries. Read their full press release below or here. The Hague, 23 May 2019 – Today, we were informed by the Dutch government that the […]
Green Climate Fund Approves USD 100 Million Investment in Climate Investor One
October 24, 2018At the twenty-first Board meeting (B.21) of the Green Climate Fund (GCF) in Manama, Bahrain, the Board approved an USD 100 million investment spread across the Climate Investor One (CIO) Development Fund & Construction Equity Fund vehicles. The GCF investment targets 11 focus countries, Burundi, Cameroon, Djibouti, Indonesia, Kenya, Madagascar, Malawi, Mongolia, Morocco, Nigeria, and Uganda. The […]
Climate Investor One Third Close at USD 535 Million
June 21, 2018Climate Fund Managers, the fund manager of the innovative blended finance facility Climate Investor One (CIO), announces the Third Close at USD 535 million. The Third Close increases the facility by an additional ca. USD 75 million. Climate Investor One, a 2015 Global Lab instrument, launched in partnership between FMO, the Dutch Development Bank, and […]
Two Lab Proponents Win FT/IFC Transformational Business Awards
June 7, 2018The Financial Times and the International Finance Corporation (IFC), a member of the World Bank Group, held a major global gathering today of investors, business innovators, social entrepreneurs and other thought leaders, in which the winners of the annual FT/IFC Transformational Business Awards were announced. Three Lab proponents were selected for the shortlist, out of […]
Climate Investor One announces first close at USD 412mn
June 27, 2017Climate Investor One is the inaugural financing facility launched by Climate Fund Managers (CFM), and incubated and developed within the auspices of the Global Lab. It is the first of an intended series of climate finance initiatives designed to combat the detrimental effects of unmitigated climate change. CIO will provide expertise, technology & financing to […]
Climate Investor One sign first term sheet
February 19, 2016During the Making Solar Bankable conference of 18-19 February 2016 in Amsterdam, Climate Investor One witnessed the signing of its first term sheet – a significant operational milestone in what has already been an exciting start to 2016 for Climate Fund Managers, the fund manager of Climate Investor One. The project, which is due to […]
Dutch Government announces €50m commitment to Climate Investor One
December 3, 2015PARIS—At COP21, during a launch event for Climate Investor One, the Minister for Foreign Trade and Development Cooperation of the Kingdom of the Netherlands, Mrs Lilianne Ploumen announced a EUR 50 million commitment to the instrument. Climate Investor One (formerly the Climate Development and Finance Facility) will help fast-track renewable energy projects in developing countries, mobilizing an estimated […]
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Contact
Georges Beukering
Climate Fund Mangers
G.Beukering@climatefundmanagers.com
Adam Tunnicliffe
Climate Fund Mangers
A.Tunnicliffe@climatefundmanagers.com