The US International Development Finance Corporation (DFC), a state agency established by President Donald Trump in 2018 in part to counter China’s influence in the developing world, will invest up to $2bn in renewable energy schemes to help the globe’s 800 million people who have no access to a power grid.
It has teamed up with the Rockefeller Foundation, which has pledged $50m to "de-risk" the DFC’s money, and will pursue mini-grids and off-grid local sources as part of the mix to avoid the need to build costly transmission lines.
The pair announced their memorandum of understanding on 21 December, with a view also to helping the world’s 2.8 billion people who have unreliable access to electricity.
Secondary goals are to support economic recovery from the Covid-19 pandemic and to boost economic growth.
They will also try and draw in other organisations for co-financing, grant making, advocacy and technical assistance.
Rockefeller Foundation president Rajiv Shah said: "The pandemic has undermined decades of progress on poverty reduction. Global cooperation and investment are desperately needed to address this crisis and ensure a broad and inclusive economic recovery."
DFC chief executive Adam Boehler said they aimed to use public and private finance to provide community-owned energy schemes where projects would have trouble raising conventional private finance.
Created by the bi-partisan "Better Utilization of Investment Leading to Development Act" – or BUILD Act – the DFC was conceived partly as an alternative to China’s Belt and Road Initiative, which sees governments of developing countries taking out loans for big infrastructure projects.
As described by the Center for Strategic & International Studies, the DFC "offers a private sector, market-based solution", and lends to small and medium-sized enterprises.Â
The DFC says its mission is to provide the developing world with "financially sound alternatives to unsustainable and irresponsible state-directed initiatives".Â
According to the Green Belt and Road Initiative Center, a research organisation, investment in Belt and Road projects totalled $23.4bn in the first six months of 2020, a fall of about half from the first half of 2019.Â
Image: Distributed renewables projects, like this one in Mongolia funded by the Asian Development Bank, put off-grid generation right where consumers are (Courtesy of the Asian Development Bank press office)Â