Introduction and Background: Both SSA and SEA governments demonstrate ambitious commitments to clean energy within their NDCs. SSA countries, including priority countries such as South Africa and Zambia aim to address energy poverty, reduce greenhouse gas emissions, and foster sustainable growth through these commitments. Similarly, Southeast Asian countries with priority countries such as Indonesia and the Philippines have set ambitious clean energy goals in their NDCs to support their sustainable development agendas. In addition, regional frameworks such as the ASEAN Plan of Action for Energy Cooperation (APAEC) underscore this ambition, targeting 23% clean energy in the total primary energy mix by 2025.
SCAF III, with its focus on clean energy generation (primarily solar and wind technology solutions, but also small hydro Battery Energy Storage System and energy efficiency solutions), directly contribute to improving the energy mix of the targeted countries. Nearly all countries targeted by SCAF III possess sector-specific policies and development plans aimed at deploying clean energy while simultaneously enhancing energy access.
Two of priority countries targeted by the project illustrate how the project support transforming their NDC ambition into action:
- South Africa: SCAF III directly supports South Africa’s NDC commitments, which include peaking emissions by 2025 and achieving net-zero by 2050, both requiring significant private-sector involvement. By reducing carbon emissions and increasing RE capacity through private sector participation, SCAF III aligns with the country’s national policies such as the Integrated Resource Plan 2019 (IRP 2019), the RE Independent Power Producer Procurement Programme (REIPPPP), and the Just Energy Transition Strategy.
- Philippines: SCAF III also contributes to the Philippines’ NDCs, supporting its 75% emission reduction target by 2030, largely through private-sector engagement and facilitating a Just Energy Transition. This aligns with the Philippine Energy Plan 2020-2040, which aims for a 35% renewable share by 2030 and 50% by 2040.
Project Goals and Approach to Transformational Change: SCAF III is being set-up to address the unique structural issues hampering the deployment of clean energy in Sub-Saharan Africa and Southeast Asia with priority countries such as South Africa, Zambia, Indonesia and the Philippines.
The overall objective of the project is to create demonstration effect for private capital to move upstream in the development value chain. SCAF III will achieve this by financing the development of projects with mature developers in more stable clean energy policy environments to create the required demonstration effect of projects reaching financial close and sharing lessons learned from such a strategy to give more comfort to the risks and successes of it. By changing investor perceptions of risk, the transformational impact of the project could be significant. Once investors see additional projects reaching financial close at a higher cadence, they will become more comfortable to move capital further upstream due the success in the market.
Project Components and Support Mechanisms: The Mitigation Action Facility’s support mechanism is specifically designed to meet the needs of business developers who have limited capacity and funding required to develop a greater number of green projects. By addressing the scarcity of bankable sustainable projects (through the removal of development risks), SCAF III aims to attract larger volumes of commercial investments once projects are fully developed.
The Financial Cooperation component will serve as a first loss capital in a multi-layer capital debt fund. This proposed financial mechanism is an effective instrument designed to attract investments from both public and private sectors into GHG mitigation activities.
Beyond its core FC contribution, the project proposes complementary TC component measures, which include project preparation costs, feasibility studies, and capacity building and advisory support provided to cooperatives, financial institutions, and policymakers.
Focus areas: accelerating clean energy from sustainable resources – solar, wind, hydro as well as EE solutions for industries
Mitigation Potential and Long-Term Impact:
- Direct mitigation impact over the course of the project (cumulated): 6,994,345 tCO2e
- Indirect mitigation impact over the course of the project (cumulated): 981,750 tCO2e.
- Cost-efficiency: 0.363 EUR/tCO2e (tbc)