The Private Financing Advisory Network is a global network of climate and clean energy financing experts, that aims to bridge the gap between entrepreneurs developing climate and clean energy projects and private sector investors.
PFAN achieves this by:
- providing free business coaching to projects, increasing the chances of attracting investment; and
- growing its investor outreach.
PFAN organises Investment Forums to showcase selected investment-ready projects to groups of investors and provides one-on-one Investment Facilitation services to investment-ready projects, shortening the path to further growth.
Our goals are to build clean energy markets one business at a time, mitigate climate change and mobilise private investment in support of the Paris Agreement on Climate Change and the Sustainable Development Goals.
As technology prices continue to fall, clean energy projects become more profitable and the appetite of investors for such projects grows, now is a time of enormous potential for the development of clean energy capacity around the world. There are many entrepreneurs out there with great ideas for clean energy and climate adaptation projects that are economically viable. However, especially in low- and middle-income countries, the projects and the investment tend to have difficulty finding each other:
- Entrepreneurs simply may lack the connections to find investment, or may be unsure of what investors look for in a business plan.
- Investors may find it difficult to assess investment opportunities in markets they are not familiar with.
PFAN bridges this gap by helping entrepreneurs build their businesses and present them in a language investors will understand and be interested in. We then help investors find and recognise the potential of these businesses.
A rapid scale-up of investment in clean energy generation capacity is required to replace energy generation based on fossil fuels and avoid the worst impacts of climate change. At the same time, significant investment will have to flow towards increasing the resilience of vulnerable populations and helping them to adapt to the changes already here and those still to come.
Governments alone will not be able to provide enough investment to achieve the impact required. Unlocking private sector finance in support of climate action is one of the main challenges that governments, international organisations and development banks have been grappling with since the Paris Agreement entered into force. PFAN has been tackling this challenge since 2006, using small amounts of public funding to leverage large amounts of private sector investment for clean energy and climate resilience projects in low- and middle-income countries.
While combating climate change is our ultimate goal, in its day-to-day work PFAN is driven by a desire to help entrepreneurs succeed. We know that getting a project off the ground is difficult; we are aware of the barriers faced by project developers, especially those linked to accessing additional investment. Helping entrepreneurs overcome those barriers to fulfil their potential and contribute to climate change adaptation and mitigation is what drives us.
Who funds PFAN?
PFAN is funded by the Governments of Australia, Austria, Japan, Norway, Sweden and the United States.
PFAN hosting structure
PFAN is hosted by the United Nations Industrial Development Organization (UNIDO) and the Renewable Energy and Energy Efficiency Partnership (REEEP). Its Secretariat is based in Vienna.
The PFAN logo
The PFAN logo is based on the hexagon that featured prominently in the branding of CTI PFAN from 2004 until 2016. The two interlocking sections of the hexagon remind one of a handshake and symbolise cooperation and bringing stakeholders together to forge solutions, which PFAN does both by connecting experts within PFAN’s Network and of course by matching entrepreneurs with investors.
Where does PFAN come from?
A conversation with Founder & Global Coordinator Peter Storey
In its search for new approaches to technology transfer, the Expert Group on Technology Transfer of the United Nations Framework Convention on Climate Change (UNFCCC) tasked the Climate Technology Initiative (CTI), hosted by the International Center for Environmental Technology Transfer (ICETT) in Japan, to promote the rapid adoption and diffusion of climate-friendly technologies. CTI soon identified two major obstacles to the uptake of climate-friendly and clean energy projects in developing countries: a lack of sound planning and a shortage of investment.
Following discussions with key private and public sector players, CTI came to a surprising realisation: there was no lack of finance, nor any lack of quality projects. What was missing were good project proposals that could attract investors’ attention.
“I had been working in banks for a number of years and was regularly approached with good ideas that could be game changers, but were simply not in a good position to express their ideas. It was clear, even back then, that there was a requirement for some sort of intermediary for small projects to see eye-to-eye with investors,” said Peter Storey, who stepped in at the last minute to replace a colleague at the meeting where the idea for PFAN would be consolidated. Though he fell into the project more or less by coincidence, Peter would become the central, driving figure of the initiative, and 12 years later he still is.
It was in Bonn, during a UNFCCC workshop, that PFAN was first mapped out – not in a formal meeting with graphs and presentations, but in a coffee shop. Peter Storey, wanting to illustrate the need for a service that would help bring projects to financial close, explained the problem facing climate smart projects. He showed the significant gap between project developers and investors, and proposed a solution: a network of consultants coaching entrepreneurs to communicate their projects to investors effectively. This simple idea, sketched out on a napkin, would be taken to proof of concept by Elmer Holt, Chair of CTI, and Taiki Kuroda at the Programme Secretariat of ICETT, and shortly after PFAN was born in the form of a pilot project. Within a year, the pilot raised US$ 37 million of investment for its first projects and CTI PFAN was then established as a full programme of CTI, supported by a secretariat at ICETT.
CTI PFAN gained support from the Japanese government, USAID and REEEP to allow for a scale-up of its activities. Under ICETT’s efficient management, the programme grew significantly in 2008, organising its first Investment Forums in Asia and Africa where project developers pitched directly to investors.
PFAN has grown in the directions where it identified the largest need for its services. “We explicitly tried not to dictate what the market would look like,” explains Storey. This approach has ensured PFAN has always been, and still is, a frontrunner, and that the projects it supports continue to break new ground in developing countries.
Demand for PFAN’s services was such that by 2016 it was clear that scaling up the programme to its full potential would require a different hosting arrangement and a new organisational structure. Following a competitive bidding process, the United Nations Industrial Development Organization (UNIDO) and the Renewable Energy and Energy Efficiency Partnership (REEEP) were selected as PFAN’s new hosts. In May 2017, PFAN was relaunched in Vienna.
Behind the strategic growth of the programme has been a drive to make a difference in people’s lives.
Many of the initial investments in PFAN projects have been development-led. However, PFAN has demonstrated that not only is it possible for a project to combine climate change benefits, development opportunities and profit generation, but that each goal enhances the other two. “We have demonstrated that it’s possible and desirable to be both: make money and do good.” Storey believes environmental sustainability is key, as this will attract additional investors.
In 2018, PFAN has closed 111 projects and raised over US$1.4 billion of investment. The pipeline contains hundreds of projects across the globe. A recent surge in activity demonstrates the great interest in PFAN services from not only project developers, but also from the donor community, which has demanded a scale up. PFAN aims to play a key role in the implementation of many more climate and clean energy projects in developing countries, and in empowering entrepreneurs, expanding access to clean energy and reducing greenhouse gas emissions.