New Certificate Programme aims to bring climate finance to off-grid projects

Shell Foundation is supporting a transformative new platform to create a global market for distributed renewable energy.

The D-REC Initiative is led by South Pole and Positive.Capital Partners and is supported by Shell Foundation (with co-funding from the UK’s Foreign, Commonwealth and Development Office), Good Energies Foundation, EnAccess Foundation and Signify Foundation.

With over $500 billion required annually until 2040 to meet universal energy targets, the mission of the D-REC Initiative is to channel climate finance from the private sector to address this critical gap.

Renewable Energy Certificates (RECs) are already widely used by corporate buyers of renewable energy to make third party-verifiable claims about the source of their electricity. D-RECs operate in a similar manner, with three key differences:

  • D-RECs will apply to distributed, small scale and off-grid renewables
  • They will be available in markets and technologies where environmental attributes are not yet applicable
  • They will capture the associated social and environmental benefits of renewable energy

By purchasing third-party certified D-RECs, companies can extend their renewable energy engagement to emerging economies. In practice, their purchase of D-RECs helps mobilise new sources of capital that encourage the continued development of distributed renewable energy projects – bringing energy access to communities living off the grid in rural areas.

“The private sector has been leading the energy transition in developed markets, driving the deployment of clean energy through investment and clean energy procurement activities,” said Paul Needham, MD at Positive.Capital Partners. “The D-REC Initiative now provides global corporations and climate investors with new tools to extend and accelerate the energy transition in emerging markets, delivering clean energy where it’s needed most.”

“Shell Foundation believes that market instruments such as D-RECs can be catalytic in driving new, untapped forms of climate finance towards bridging the energy access funding gap, increasing adoption and financing for renewables,” said Ashish Kumar, Portfolio Innovation Manager at Shell Foundation.

By connecting corporate sustainability ambition and small-scale distributed renewable energy projects, the D-REC platform provides the means to accelerate new investment and results-based climate finance in distributed renewable energy globally.

The first, limited issuance of D-RECs is expected to be available to interested companies in Q4 2021.

Find out more about the D-REC Initiative.