NDF - Financing for climate change and development projects

NDF Chairman visits projects in Kenya

Photo: NDF
Smart Water Dispensers - Water ATMs
Photo: NDF
UN visit
Photo: NDF
Electricity expansion project
Along with NDF's Managing Director, the Chairman of the Board saw first-hand projects in Kenya and gained new insight into development in Africa

Egill Gislason, NDF’s Chairman of the Board, has completed a three-day visit to Kenya together with Pasi Hellman, NDF’s Managing Director for meetings in Nairobi and elsewhere in Kenya. The purpose of the visit was to introduce the Chairman to NDF’s Africa and Kenya-focused project activities. They visited three high-profile NDF projects and the Chairman also attended a meeting with the Ambassadors of the Nordic Countries and a meeting at the UN Office. The meeting with the Nordic Ambassadors enabled interchange of country-specific knowledge of climate-related activities and the latest development of key projects. At the UN, the NDF team met with the Deputy Executive Director Ibrahim Thiaw and with UNEP directors to discuss NDF’s support to the African Geothermal Centre of Excellence - a UN initiative to create an umbrella organisation for all regional training related to geothermal energy. The Chairman, being from Iceland where geothermal energy has long been an essential part of the country’s energy matrix, concluded that NDF’s support to the Centre of Excellence represents an important part of NDF’s project portfolio.

The first project visit was to the African Guarantee Fund (AGF), a financial institution founded five years ago. NDF supports specifically AGF’s Green Financing and has a seat on the board of AGF. During the visit, the Chairman stated that NDF has an active and long-term interest in supporting AGF.

The second project visited was to the Electricity Expansion Project that NDF supports through Kenya Power, Kenya’s national electricity company. The overall objective of the Electricity Expansion Project is to increase the capacity, efficiency and quality of electricity supply and increase access to electricity in urban and rural areas. The NDF project consists of two components; 1) distribution of around 1,600 packages of 100 W solar panels and lanterns and 2) construction of a 500 kW solar plant. The lanterns are distributed to Agents, i.e. small shop owners in villages, who rent the lanterns out to residents. The NDF team visited three sites where solar lantern systems had been distributed. The team had the chance to talk to the Agents and get a good understanding of the operations. The client pays the rental fee through a mobile phone app to unlock the lantern and the money paid by the Client goes directly to an account disposed by Kenya Power. The Chairman said the project visit gave him an understanding in how extremely important a seemingly simple and not very costly project is for many people.

The third project visited was to the so-called water ATMs - smart water dispensers (SWDs) - in one of Nairobi’s less-developed areas. The project consists of a pump driven by solar PVs and a dispenser where clients tap water while continuously being charged through the use of a card with stored cash. The card is loaded through Mobile Pay. The purpose of the project was to determine the viability and sustainability of solar water projects and the use of SWDs as a mechanism of financial accountability for water schemes to promote sustainable water services. In the rural areas, traditional systems face challenges like insufficient maintenance, high cost of diesel fuel for generators and community mismanagement of water system funds. The project has been a large success as these pilots have been able to prove a sustainable financial model for solar pumped water supply. The water payments are sufficient for operation, maintenance and replacement of the equipment. In the past, there have been doubts about the possibilities to finance solar pumps with loans due to high costs for the equipment and low probability for payments to reach the lender.

The Chairman concluded that modern payment methods, i.e. Mobile Pay - something that became widespread earlier in Kenya than in the Nordic countries - formed a decisive cornerstone for both projects’ realisation. The projects can now count on reliable payment streams, a prerequisite for a project to be bankable; a bankable project is able to seek loan financing, enabling considerable scale-up potential.

More information:
African Guarantee Fund Green Guarantee Facility [NDF C88]
Off-Grid Electrification using Wind and Solar Energy in Kenya [NDF C24]
NCF: Community Based Adaptation to Climate Change through Environmentally Sustainable Water Resources Management in Isiolo District [NDF C3 B8]