Armstrong Invests in Clean Energy, As Green Climate Fund Lags Behind

Reducing climate changing greenhouse gases is an imperative of both developed and developing nations. However, developing nations often lack the financial resources to effectively manage their emissions or to develop renewable energy capacity. As such, financial assistance, through inter-governmental organisations such as the United Nation’s new Green Climate Fund is needed. While it is taking time to get under way,  the private sector is not holding back. Armstrong Asset Management has shown with the successful  US$164 “close” of its Clean Energy Fund, which has already started investing in South East Asia projects. Read more

Green climate fund can power poor countries

By Paul Brown in RenewEconomy (4 November 2013):

LONDON – A vast program of financing solar, wind and other renewable electricity technologies for developing countries using the UN’s new Green Climate Fund is proposed this week.

The Fund is currently being set up by the United Nations Framework Convention on Climate Change to “provide support to developing countries to limit or reduce greenhouse gas emissions” as well as to help them to adapt to global warming.

UN’s new Green Climate Fund provides support to developing countries to limit or reduce greenhouse gas emissions” as well as to help them to adapt to global warming.

The report by the World Future Council says providing feed-in tariffs for developing countries so that they can finance setting up large-scale renewable systems and feed electricity to their grids is the best way forward for the fund.

Feed-in tariffs provide the owners of small or large-scale wind and solar arrays with a guaranteed price for electricity over 20 years, so the investor is certain to get a return on their capital. The scheme has worked in developed countries like Germany and Italy to rapidly boost renewable output.

Pilot projects

If the same system was introduced into developing countries, the report says, it would be an important step in keeping the world’s temperature from exceeding a 2°C increase over pre-industrial levels, the limit set by politicians as the threshold of unacceptably dangerous climate change.

Although the Green Climate Fund is still not operational, the report says that a one billion euro ($1.36B) fund should be made available as soon as possible for pilot projects in three countries to test the feed-in tariff scheme.

These would be for three classes of countries, starting with one of the least developed states and two that are more advanced but still in need of power. That would test how the scheme would work and who would benefit most from it, and would eliminate some of the teething problems. Depending on the technology chosen, this money could fund between one and three megawatts of clean power.

That way any glitches could be discovered and then corrected when a much larger amount of funding became available. Hundreds of wind, solar, energy-efficient biomass and small hydropower projects could then be financed in the same way.


Axel Michaelowa and Stephan Hoch say in the report, Fit for Renewables?, that their scheme needs tight controls to make sure that money is not wasted.

Although they do not mention the criticism of the Convention’s Clean Development Mechanism, where carbon credits have been claimed for dubious projects, they do not want another UNFCCC scheme designed to help developing countries to fall into disrepute.

They acknowledge that one of the problems of getting feed-in tariffs right is that the price of renewables, particularly solar, is falling all the time. If the support price is set too high there is a massive uptake and the country concerned is locked into paying too high a price for electricity. If the price is cut too quickly then the industry judders to a halt and many are thrown out of work, a situation that occurred in the United Kingdom.

An added problem in developing countries is making sure that the national or local grid can take up and use the electricity generated. Some developed countries have already had difficulties with this, so sorting out the grid must be part of any financing package, the report says.

The authors say the Green Climate Fund needs to look at all these aspects and develop a transparent system that prevents overfunding of schemes and builds trust, so that industrialized countries provide sufficient money.

The report envisages 100 gigawatts of electricity being funded in this way by 2020 – the equivalent of the output of 100 large-scale coal-fired power plants. This would cost 1.3 billion euros ($1.75B) a year to fund, sustained over two decades.

Paul Brown is a joint editor for Climate News Network. Climate News Network is a news service led by four veteran British environmental reporters and broadcasters. It delivers news and commentary about climate change for free to media outlets worldwide.



Armstrong’s cleantech breakthrough

By Andrew Woodman in Asian Venture Capital Journal (14 November 2013):

When it took its maiden Southeast Asia Clean Energy Fund on the road mid 2011, Armstrong Asset Management was sailing into unchartered waters. While there have been other renewable energy funds active in the region, many have benefited from either a broader geographic or sector focus.

“There was no benchmark for private equity in dedicated clean energy funds for Southeast Asia,” says Andrew Affleck, Armstrong’s managing partner, speaking of initial challenges in raising the fund. “Investors needed to see a number of the macro drivers for renewable in Southeast Asia in order to get comfortable outside of our team’s ability to deploy money.”

These drivers included the evolution of government policy in support of renewable energy and the gradual fall in cost for items like solar panels, which have helped make renewable energy projects a more viable proposition.

It is against this backdrop that the fund – which officially launched in May 2012 – managed to find its initial commitments from a handful of European development finance institutions (DFIs) such as GEEREF and DEG, and an Asian-based corporation, leading to a first close last August.

International Finance Corporation (IFC) soon followed, committing $20 million in May.

Then, with additional pledges from French DFI Proparco and Geneva-based Unigestion, the fund was able to surpass its initial target of $150 million, reaching final close of $164 million. In total, Armstrong has signed up 10 investors from Europe, North America and Asia.

The 10-year fund will provide development capital to small-scale renewable energy and resource efficiency projects in Southeast Asia. Typical projects will generate power of up to 10 megawatts from renewable energy resources, such as solar, hydro and wind.

The fund will makes 10-15 investments of $5-25 million each, although this could increase with co-investment.

“This is a sector that has huge need and potential scale,” Affleck explains, “so $164 million is really a drop in the ocean to what could be needed. Having partners like IFC, DEG and other DFIs that would willingly be involved in co-investment is real bonus for us and for the developers we are currently talking to.”

The fund has backed two projects so far. In August, it announced a commitment of up to $30 million to Annex Power to finance the development of solar photovoltaic and biogas power projects in Thailand, Indonesia and the Philippines.

Three months earlier, it took a 60% interest in Symbior Elements to develop and operate solar projects in Thailand. Affleck adds that Armstrong has number of deal in its pipeline in Indonesia.

“The majority of our pipeline is across Thailand, the Philippines and Indonesia, mostly because that is where we have seen the more advance policies towards supporting private investment in renewables,” he adds. “However, we are also seeing a number of deals in Vietnam and Cambodia.”


Leave a Reply