Rethinking financing
Unlock the Financing door to achieve ‘Well below 2 cents’
Main players
The key to successfully accomplishing the mission:
SHIFT THE TRILLIONS
The obvious challenge is to shift the affordable institutional trillions to the new energy system, starting with renewable power generation, followed closely by energy management and storage.
The granularity challenge
These trillions are currently invested in large chunks in regulated, well-defined securitised and liquid asset classes traded in a limited number of financial locations. In the new system it would be necessary to invest them in small-sized alternative assets, distributed on different territories, not tradable and illiquid.
The pipeline
issue
Channelling investments to solar power generation assets, and more broadly to sustainable infrastructures, requires a financial transformation so these assets become an investable asset class. It also requires volume which the industry calls ‘pipeline’. Not a pipeline of projects, but a pipeline of normalised cash flows.
A roadmap
for scaling up financing
WHAT WE DID
TWI teamed up with Société Générale to propose a possible pathway to reach affordable finance at scale in solar power generation.
When cash flows are governed by the same law, under the same contractual arrangements and with the same guarantee instruments, from an institutional investor’s perspective they can be considered as normalised, underlining the importance of a systemic approach.
Digitisation of key processes, particularly due diligence, can help simplify work, reduce risks and accelerate investment.
Then aggregation into investable pipelines can be made with the usual financial techniques of pooling, asset management, securitisation, etc.
Our report
Our report ‘Tentative roadmap to affordable finance at scale in solar power generation’ was published on 29 November 2019 on the occasion of the fourth Climate Finance Day in Paris.
And you,
what would you do?
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Next mission
Rethinking leadership
Creating a systemic approach and developing collective solutions to set up a new market framework.
Rethinking uncertainty
Because uncertainty cannot be evaluated and priced, what we need is a leap of faith: the necessary strong commitment we need to make when everything is a blur, to federate all the stakeholders.
Rethinking communication
Sustainable energies are generally misunderstood and underestimated. A simple and federative narrative is necessary to change people’s perception and gather everyone around a common goal.
Rethinking Policy
Essentially decentralised and close to demand, the renewable energy system empowers people. It requires clear policies and symbolic political messages.
Rethinking regulation
Achieving a ‘well below 2 cts’ target can only happen if cash is available at the right price, in the right quantity, for the right tenure, in the right location.
Rethinking transactions
Scaling solar power deployment requires the simplification and automatisation of transactions. After having radically decreased the cost of renewable power, we need to focus on the reduction of soft costs.
Rethinking financing
The obvious challenge is to shift the affordable institutional trillions to the new energy system, starting with renewable power generation but followed closely by energy management and storage.
Our final report
This 200 pages report provides a summary of nearly four years of work carried out by TWI to accelerate the transition to affordable, reliable, sustainable and modern energy for all, starting with solar power.
Build several mini-grids across Africa and influence policy that helps the solar energy industry in Nigeria and other African countries.