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P4G grant of $1 million awarded to geothermal de-risking insurance solution

Drilling rig at Menengai, Kenya (source: ARGeo)
Alexander Richter 20 May 2020

An innovative insurance solution to overcome risk barriers in geothermal resource development by Parhelion Underwriters has been awarded a USD 1 million grant to progress its investment fund for de-risking geothermal projects in East Africa.

Parhelion Underwriting Limited, the UK-based energy and climate risk insurance and advisory group, has today been awarded a P4G (the Partnering for Green Growth and Global Goals 2030 Initiative) scale-up grant and partnership from the national Danish P4G platform for the company’s continued efforts to mobilise system change within the insurance industry and allow underwriters to pursue sustainable development.

  • The P4G grant will enable Parhelion and its partners to develop “GeoFutures GreenInvest” – a vehicle to mobilise insurance underwriting capital to de-risk sustainable investment opportunities
  • Parhelion will progress its GreenInvest platform – a dedicated insurance capital vehicle
  • GeoFutures – an investment fund to de-risk geothermal projects in east Africa

The P4G scale-up grant accelerates, funds and recognizes innovative public-private partnerships driving green growth. Through a partnership with various businesses, governments and environmental foundations, Parhelion created “GeoFutures GreenInvest”, which means the company can now focus on developing breakthrough insurance solutions in support of the United Nation’s Sustainable Development Goals.

The scale-up grant of up to $1m will enable Parhelion to progress its GeoFutures Fund which will offer innovative insurance solutions to de-risk geothermal investment opportunities by deploying sustainable capital from private sector insurance.

As part of the solution, the partnership will establish an investment fund to provide sustainable development loans and a premium finance facility to early stage geothermal project developers. Additionally, a specialist underwriting vehicle will be established and capitalised to offer innovative insurance underwriting solutions for the sustainable investment sector.

Countries such as Ethiopia and Kenya have an enormous and yet untapped geothermal power energy. There is a growing demand for affordable, clean energy access, but high risk and high capital costs associated with developing geothermal resources act as a significant investment barrier.

The P4G grant and partnership will also enable Parhelion’s GreenInvest blended finance platform, which will mobilise insurance underwriting capital to de-risk sustainable investment opportunities. By using the power of insurance underwriting capital to assume the risk which debt and equity providers are unable or unwilling to take, the partnership seeks to mobilise private sector capital in both these countries and beyond.

Julian Richardson, CEO of Parhelion, said: “We are delighted to have been awarded this partnership opportunity and grant because it enables us to mobilise private sector insurance underwriting capital at scale and promote system change. This can only be done through collaboration and partnerships. P4G will enable these crucial partnerships with key stakeholders and influencers; providing a valuable platform to amplify the message and deliver the change the world needs, including creating 600 MW of geothermal power in Kenya and Ethiopia, which is essential.”

David Howden, CEO of Hyperion Insurance Group, a GeoFutures GreenInvest partner, said: “As a company we are working hard to build a sustainable business for the next 25 years and beyond.  Intrinsic to this vision is being a part of the solution to the environmental and sustainability crisis the world is facing and our partnership with Parhelion is an exciting step on that road for the industry and our clients.  Julian’s experience, vision and energy are helping us to form new connections in this important space, increasing awareness throughout the insurance industry and further developing innovative products that support sustainable development.  We can then leverage our extensive global network across 90 countries for the purpose of product distribution and business generation to place insurance products that are often the first of their kind in the London market.”

David Shreeve, Director of The Conservation Foundation, said: “Geothermal energy has the potential to contribute to addressing climate change and conserving threatened natural resources. We are pleased to support Parhelion’s project and provide administrative support, which will develop tools to stimulate green energy sources, and in the evaluation of the potential impacts of geothermal projects.”

Dr Marit Brommer, Executive Director, International Geothermal Association, said: “We at the IGA are delighted to embark on this journey and work with Parhelion and partners on the ‘GeoFutures – GreenInvest’ project. We are active in 64 countries around the globe and serve our 6000 members through 35 affiliated country organisations. East Africa is a key region and offers an unlimited potential for harnessing the geothermal resource. Mobilising insurance underwriting capital to de-risk geothermal investment opportunities is crucial to see the actual projects implemented on the ground. We are looking forward to build the expertise in East Africa and simultaneously to engage in conversations with the wider geothermal sector to see the results transferred in other key geothermal markets and regions as well.”

The funding was sought in partnership of The Conservation Foundation, International Geothermal Association, Parhelion Underwriting Limited, Kenbright Holdings Limited, Earth Active, FSD Africa, Howden/RKH.

Source: Parhelion Press ReleaseP4G