The Green Climate Fund (GCF) has approved the allocation of $50-million in equity to REPP 2, a new debt fund providing an opportunity to invest in sub-Saharan Africa’s fast-growing renewable energy market.

Climate and impact fund manager Camco is developing REPP 2 as a $250-million fund designed to deliver significant climate, economic and gender impacts, while ensuring sustainable returns for investors.

Latest research shows that about 590-million people in sub-Saharan Africa do not have access to electricity, with the International Energy Agency claiming $22-billion is needed yearly to deliver reliable energy access across the continent by 2030 to meet the UN’s Sustainable Goal 7.

At the same time, Africa is said to be facing increasing climate hazards and countries require an estimated $2.8-trillion by 2030 to implement their Nationally Determined Contributions under the Paris Agreement.

REPP 2 has been structured as a paradigm-shifting blended finance facility leveraging public, private and commercial funding to invest in small-scale and decentralised renewable energy projects in sub-Saharan African countries.

Through its private sector approach, and a strong focus on supporting communities vulnerable to climate change, it is projected that over REPP 2’s lifetime the fund will make 35 to 40 investments that support the development of decentralised renewable energy and strengthen the resilience of national grid infrastructure to promote economic development in sub-Saharan Africa.

It is also expected to provide 7.7-million people with new or improved access to clean, reliable and affordable power across Africa, increasing economic opportunities and access to productive use of energy activities.

It also aims to mitigate 12.7-million tonnes of carbon dioxide equivalent in greenhouse gas emissions over projects’ lifetimes; invest $70-million in projects aligned with 2X’s gender lens investing criteria; and mobilise $786-million in third-party funding for green growth in target countries.

With its blended finance structure, REPP 2 is said to represent an evolutionary step from the $120-million REPP facility, which was fully funded by the UK’s Foreign, Commonwealth and Development Office.

The announcement follows the REPP board signing an indicative term sheet for a junior equity investment of up to $50-million from REPP into REPP 2.