Photo: GGF
The Green for Growth Fund (GGF) sustained progress last year in mitigating climate change and promoting sustainable economic growth in its 18 markets, despite continuing headwinds. It invested a cumulative EUR 1.7 billion in partner institutions and supported a total of 1.3 GW in renewable energy capacity until the end of 2023.
The new Impact Report, called ‘Greening the financial sector in emerging markets’, revealed that the Green for Growth Fund has surpassed its annual financial and impact targets. GGF, advised by Finance in Motion, noted it is working on green energy funding, a clean energy vision and its long-term impact.
Active in 18 countries, the investment vehicle expanded its cumulative green loan portfolio to EUR 1.7 billion in 2023. It supported just under 1.3 GW of renewable energy capacity until the end of 2023, resulting in energy savings of 4.7 TWh per year. The measure compares to 4.27 TW from 2022.
The fund, registered in Luxembourg as an investment company with variable capital, started this year with EUR 962 million in assets under management. The outstanding investment portfolio amounted to EUR 823.8 million.
Green for Growth Fund expanded partnership with UniCredit Bank Serbia in 2023
GGF mobilizes public and private investors to mitigate climate change through investments in energy efficiency and renewable energy. At the same time, it engages with financial sectors to mainstream green finance and leave a lasting and growing impact.
The fund has 19 investors, six donors and 65 active partner institutions. GGF gives partner institutions the tools to become climate finance frontrunners. It supports banks in the development of green products and sustainability strategies.
For instance, the Green for Growth Fund provided a EUR 50 million loan for utility-scale renewable energy projects to UniCredit Bank Serbia. The partnership dates from 2016.
Investments enable saving or treating 1.5 million cubic meters of water per year
The fund leverages risk capital provided by public institutions with additional private capital, to substantially increase investment volumes in regions and sectors that do not normally attract such flow. GGF has a blended finance structure. It primarily invests in measures that reduce energy consumption, resource use and carbon dioxide emissions.
On that note, the fund’s investments lowered CO2 emissions by 1.2 million tons per year. It boosted the volume of saved or treated water to 1.5 million cubic meters per year in 2023 from just 115,000 cubic meters.
Knowles: Decisions taken during the energy crisis are paying dividends for cost-competitive businesses, resilient energy systems and realization of climate targets
“These achievements are largely due to our efforts to leverage the accelerating deployment of renewables and the renewed focus on energy efficiency in our regions. Decisions taken during the energy crisis are paying dividends for cost-competitive businesses, resilient energy systems and realization of climate targets,” Chairperson Christopher Knowles stated.
He acknowledged that the fund continued to face headwinds last year but stressed that it tackled the challenges thanks to its resilient structure.
Innovative financing for Blue 1 solar power project in Albania
Another example in the Western Balkans is the Blue 1 solar power project. GGF supported the 50 MW facility in Albania with a EUR 28 million loan, covering up to 75% of costs. It is the largest unsubsidized photovoltaic project in the region.
“This lighthouse project was built on a financing strategy that ventured into entirely new territory, including a bridge-to-PPA structure and the absence of government support. It is a true example of innovative financing in an emerging market – so much so that GGF was presented with the prestigious Market Pioneer Award from IJGlobal,” Fund Director for GGF in Finance in Motion Borislav Kostadinov pointed out.
Digital marketplace for energy efficiency in BiH
The fund also described the cooperation in Bosnia and Herzegovina with Partner Microcredit Foundation on developing a digital marketplace for modern heating systems, such as biomass pellet boilers and heat pumps, and other energy-efficient investments. The marketplace matches buyers with screened vendors, providing a smooth customer experience, but also quality assurance, GGF explained.
Additionally, the platform offers access to online loan applications.
Of note, wind park Bogoslovec, the fund’s first equity investment, started regular operation this year. The facility is located southeast of Skopje in North Macedonia.
GGF’s Technical Assistance Facility supports augmenting investment impact with its know-how while ensuring projects are developed according to best international practices from environmental, social, and technical perspectives.
The fund operates in Southeast Europe, the European Eastern Neighborhood and in the Middle East and North Africa.
GGF was initiated as a public-private partnership in December 2009 by Germany’s KfW Development Bank and the European Investment Bank, with financial support from the European Commission, the German Federal Ministry for Economic Cooperation and Development, the European Bank for Reconstruction and Development and the Austrian Development Bank (OeEB).
Finance in Motion focuses on sustainable development in emerging and developing countries. The company structures, manages and advises impact investment funds and brings together public and private investors. The aim is to combat climate change, strengthen biodiversity conservation, promote the sustainable use of natural resources and improve living conditions and economic opportunities in the target countries.
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