In view of Scatec Solar’s proven and pioneering track record of producing Photovoltaic solar electricity in emerging countries, the United Nations Environment Programme (UNEP) invited Mr. Carlsen to speak at the UNEA.
At the press conference, Mr. Carlsen pointed out that in addition to facilitating the green shift and producing clean electricity that avoids carbon emissions, Scatec Solar’s projects also contribute to local job creation, develop supply chains, build infrastructure and generate economic activities in the host countries.
Speaking earlier at the UNEA’s symposium on ‘Mobilizing Sustainable Investments: Making Private Finance work for Sustainable Development”, Mr. Carlsen observed that Climate finance has largely been distributed through instruments like concessional loans and grants so far, via multilateral development banks. “The next step is to allow this finance to be used to reinsure investment guarantees (or Power Purchase Agreement (PPA) guarantees) that make cash flows more attractive to institutional investors. This will allow much greater leverage of private investment per dollar of public money made available,” said Mr. Carlsen.
Finance instruments such as Investment guarantees, carbon finance and contracts for difference on energy prices would enable companies like Scatec Solar to not only contribute to bridging energy deficits in emerging countries, but also enable these countries to meet their sustainable development goals, he pointed out.
“Green finance or innovative climate finance instruments and guarantees by financial institutions can overcome some of the barriers to raise private investment in emerging countries” said Mr. Carlsen. Barriers include high capital costs, sub-optimal credit rating of offtakers and lack of convertibility of host country currency.
“There is a clear business rationale for financial institutions to develop climate finance products to further enable companies like Scatec Solar that invest in projects delivering real, verifiable and additional environmental and sustainable development benefits,” said Mr. Carlsen.
All Scatec Solar’s PV plants in emerging countries are certified under the UN’s Clean Development Mechanism (CDM) programme of activities. Scatec Solar’s ongoing projects avoid over 700,000 tons of carbon emissions a year, and this is set to increase to more than 2 million tons by 2018. Last Month, Norway’s Climate and Environment Ministry signed an agreement with Scatec Solar to purchase CER (Certified Emission Reduction) from the company’s three African projects.