Energy transition: where and how investors create impact
November 01, 2024
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7 min read
A deep dive into individual projects reveals the real-world impacts of energy transition investments.
Highlights
- Alongside performance, investors need to know if their impact allocations are making a difference in terms of both climate change and social benefits.
- Mirova’s latest annual impact report reveals the benefits across its €3.5bn-plus portfolio of global energy transition projects.
- The range of technologies and sectors are expanding, giving investors the opportunity to create even more impact over the long term.
How much impact do energy transition investors actually have? Alongside performance, investors need to know if their allocations are really making a difference in terms of both climate change and social benefits.
They also want to know which sectors and technologies have the biggest impacts and why. A thorough impact report can satisfy these investor needs.
The aggregate impact
Mirova’s latest annual impact report aims to do just that. Published in summer 2024, it reveals the benefits across its €3.5bn-plus portfolio of global energy transition projects.
The report highlights that the 1,000-plus projects financed by Mirova’s funds in 19 countries generated 8.2TWh of green electricity in 2023, up 40% on 2022.
Mirova’s funds also avoided 2 million tons of CO2 eq. emissions in comparison with the current energy mix of the investee countries, and provided or improved the access of 3.5m people to green energy.
Furthermore, its low-carbon mobility investments led to the reduction of CO2 linked to transportation, achieving 74 million km of green travel.
So much for the headline figures. The real interest for investors is how Mirova, an affiliate of Natixis Investment Managers (NIM), has achieved these milestones.
Picture this: photovoltaic electricity
The impact report presents concrete examples to illustrate the tangible impacts of Mirova’s energy transition investments. Some of these sectors and technologies are now well established, but others are new and certainly non-traditional.
Take photovoltaic electricity, a relatively new technology. Girasole Energies and Mirova have set a goal of exceeding 500 MWp of installed capacity in 2028 through a joint investment of around €600 million.
Girasole Energies is an independent producer of photovoltaic electricity. To produce local, low-carbon and competitively-priced electricity, Girasole develops, finances, builds and operates photovoltaic power plants throughout France whether on the ground, on rooftops, or in carparks.
Girasole collaborates with farmers, local authorities, and tertiary and industrial companies, who provide land to host photovoltaic production units.
By contributing to renewable energy capacity in France and Europe, Girasole projects directly contribute to the Paris Agreement objectives. Moreover, as it accelerates its rooftop PV installations, the company limits its land footprint and associated soil and biodiversity damage.
Following Mirova’s investment, Girasole set up an ESG committee to map progress on an Environmental & Social Action Plan (ESAP).
Acceleration of EV
Electric vehicles (EV) are one of the more mature energy transition sectors, but EV infrastructure has not kept pace.
Mirova-backed Driveco is accelerating the uptake of electric vehicles by rolling out charging infrastructure and deploying fast, universal charging stations throughout Europe. In particular, the company works with property owners to equip their car parks with electric charging stations.
The deployment of electric vehicles enabled by the project is, for example, helping Spain achieve its strategy for low-carbon transportation, which includes the implementation of 7 million charging points by 2030. Driveco also contributes to public health by significantly reducing air pollution — responsible for about 7 million deaths annually, according to the World Health Organization1.
In 2023, Mirova helped Driveco define its CSR Roadmap and further formalise its ESG risk management processes. The company also recruited a CSR leader and created a formal CSR committee.
Making energy more efficient
In the field of energy efficiency, Sofiac targets the financing of over €200m of energy efficiency projects in the tertiary, industrial and shared housing sectors, focusing on organisations with annual electricity bills of more than €1 million.
In this way, Sofiac is contributing to the French government’s National Low Carbon Strategy, which aims for a 49% reduction in GHG emissions from buildings by 2030, and no GHG emissions from buildings by 2050, excluding industrial buildings.
As Sofiac’s revenues are directly linked to energy savings, it is highly incentivized to target the organisations with the most ambitious plans for energy savings and carbon footprint reduction.
Sofiac’s financing also contributes to local job creation across the project value chain, from energy auditors to construction workers.
Windfarms with a twist
While windfarms are prevalent worldwide, Useroles has uniquely deployed innovative camera systems in its windfarm to protect avifauna, ie local bird species.
The park is located close to a migratory corridor used by threatened species such as Red Kite, so it has implemented measures to reduce the impact on avifauna during the construction phase and throughout the operating period.
These include an avifauna detection system (SDA) to reduce the risk of large raptors such as Red Kites colliding with the farm. Cameras placed on the turbines allow a 360° vision over a distance of 250m, and are linked to AI-based species identification software. When a target is detected, the SDA regulates the rotation speed of the blades, up to a complete stop if needed. If the detected target continues to approach the wind turbine, an acoustic alarm is activated.
Using eight Nordex 117 turbines creating a capacity of 20MW, the expected annual production of the windfarm is about 50 GWh, effectively supplying 19,000 inhabitants of metropolitan France with clean electricity.
Clean energy to remote regions
Mirova SunFunder East Africa and Mirova together have provided $7.5 million of debt financing to Solar Panda. Solar Panda provides clean, affordable electricity to rural communities in Kenya. It sells its affordable and reliable Solar Home System (SHS) kits and appliances using an accessible “loan-to-own” model, suitable for many rural families and small businesses.
Solar Panda’s upgradeable kits can include a TV, radio, lights and mobile phones. It estimates that each household can save $300-$800 over four years by eliminating the need for kerosene and mobile phone charging expenses.
So far, Solar Panda has provided kits to 300,000 rural homes and 3,800 SMEs, and mitigated approximately 76k tCO2 eq. a year since its inception in 2016.
Solar Panda also has a refurbishment program for abandoned, defective, or damaged e-waste at a locally-built facility. In 2023, the company refurbished 8,682 units and recycled 14.1 metric tons of e-waste through a certified waste management partner (EnviroServe), where refurbishment was not possible.
Irrigation for smallholders
Many smallholder farmers rely on rainfall for watering their crops, which has become challenging given the increasingly erratic weather patterns in sub-Saharan Africa due to climate change. With SunCulture pumps, farms are more resilient.
SunCulture is a Nairobi-based climate-tech company that helps smallholder farmers grow more food through climate technology, better financing, and a digital marketplace.
Founded in 2012, SunCulture sells low-cost, solar-powered irrigation solutions using a Pay-As-You-Grow consumer finance model across sub-Saharan Africa. The products are coupled with Africa's first carbon credits for solar irrigation, which are used to reduce the cost of the products for end users.
Using the technology, farmers gain access to valuable information for optimal planting, fertilization, and pricing, which can typically lead to a 5x increase in yield and a 6x rise in income.
Mirova SunFunder East Africa and Mirova have committed a total of $7.75 million in debt allowing SunCulture to reach more customers.
SunCulture’s irrigation systems replace expensive and environmentally-harmful and health-damaging diesel/petrol pumps with more efficient, environmentally-friendly and affordable solar-powered solutions. In 2023, 50,000 tCO2 eq. were avoided due to pumps installed in Kenya. Compared to furrow irrigation (used with diesel pumps), sprinkler and drip irrigation save 60% and 90% of water usage respectively, while avoiding soil erosion and depletion.
In 2023, SunCulture reached 11,000 new low-income rural customers, of which 34% were women. Around 25,000 direct and indirect jobs have been created by the company.
Solarisation of telecoms
Access to reliable energy solutions for telecom and mobile network operations in emerging markets is a challenge, with grid towers dependent on costly and high-emitting energy sources like diesel.
Mirova invested in Energy Vision in 2023. Energy Vision’s projects include the solarization of over 300 telecom sites in Gabon and 50 off-grid sites in Nigeria.
To date, Energy Vision has delivered solar-hybrid energy to over 1,000 telecom sites. As part of Mirova’s investment, an Environmental and Social Action Plan (ESAP) was developed to further improve Energy Vision’s ESG performance. Key aspects of the ESAP include strengthening the ESG team with the hire of country-level ESG managers, enhancing supply chain procedures, implementing an inhouse gender strategy and improving health and safety practices during installations.
The future?
Competition for projects is increasing as the energy transition sector matures, but the pool of projects is deepening at the same time.
The range of technologies and sectors will undoubtedly expand, giving investors the opportunity to create even more impact over the long term.
