Prosus & South Pole Sign Deal with Innovative New Climate Finance Instrument

Global technology investor Prosus and South Pole (top provider of climate solutions) have joined forces to use the new D-REC market tool to deliver distributed renewable energy projects in response to growing calls for greater corporate climate action at COP27. High social impact projects in South Africa and India will be their main priorities.

Prosus has agreed to purchase 3 GWh of D-RECs from the South Pole, delivering 1GWh annually, between 2022 and 2025. The transaction will provide the urgently-required funding for the establishment of innovative renewable energy projects that will replace carbon-intensive electricity and give rural populations access to energy. At the COP27 United Nations, Climate Change Conference in Sharm El-Sheikh, Egypt, the agreement was announced on Finance Day.

The REC market & D-RECs

D-RECs expand the reach of Renewable Energy Certificates (RECs), a popular market tool, to smaller projects with patchy grid connectivity and/or difficult financial access. D-RECs have made renewable energy options practical, such as solar mini-grids, which provide clean electricity to households, schools, hospitals, and irrigation systems. The enormous development potential of D-RECs contributes to the UN Sustainable Development Goals on health, food security, education, and combating climate change through enhancing vital services for communities.

Prosus is providing climate funding for renewable energy projects by purchasing D-RECs, which replace polluting off-grid energy generation like diesel generators and electricity from some of the most carbon-intensive networks in the world. The D-REC Initiative’s open technology ledger has produced rigorous criteria for business reporting against renewable energy procurement targets by providing buyers with trust in the origination of their certificates, including Prosus.

There are 759 million people worldwide who still lack access to power, and it will cost more than US$500 billion yearly to supply the rising demand for electricity by 2040, making the problem of energy access enormous in scope. The REC market, however, has been constrained by risks associated with conventional renewable energy finance, a perceived lack of transparency, and the need to demonstrate impact. The risk barriers present in conventional renewable energy financing are eliminated by D-RECs through leveraging business investments, among other advantages, such as new sources of revenue and improved unit economics for DRE projects, improved economics for Results Based Financing (RBF) programs, new mechanisms for corporates to achieve Scope 2 and 3 targets and secure verifiable impacts from ESG investments, new ways to measure and monetize other environmental and social benefits, such as carbon, energy access, and other Sustainable Development Goals (SDGs), accelerated deployment of DRE in emerging markets.