"If things happen too slowly, they cannot be a catalyst"

On the sidelines of our Private Sector 25^th anniversary event in June, we spoke with Marco Arcelli, Chief Executive Officer at ACWA Power, to hear his views on how to mobilize more private sector funding for climate and development work.

When it comes to development and climate action, why do we need strong partnerships between the public and private sectors?

I joined ACWA Power about 18 months ago. It is a Saudi company that took the best from around the world and brought it to Saudi Arabia — and today is bringing the best from Saudi Arabia to the rest of the world. ACWA Power is working not only in the Gulf but across the Global South. I come from the Global North, so it was eye-opening to see how to develop the South, from which 90 percent of energy growth will come.

The second largest country in our portfolio is Uzbekistan. Here, over the course of five or six years, we have put together a US$15 billion investment portfolio. How did it happen? It’s the combination of leadership with a clear vision and dialogue between investors and the public sector — plus quick decision-making.

On our side, we bring the best technologies from around the world for the most affordable, sustainable solution. We bring project financing and equity partners and ourselves. For every dollar that we invest, we mobilize our partners. The combination of these two factors — leadership dialogue decisions and acting as a catalyst — is how to accelerate the energy transition also in the Global South.

ACWA Power and the OPEC Fund have a strong track record of cooperation: From wind power in Azerbaijan to award-winning solar plants in Egypt. As the world ramps up climate action under the UN’s 2030 Agenda, what more can we expect — and where?

We have a great relationship with the OPEC Fund, particularly in Jordan and Uzbekistan. We have excellent foundations to build on, not just on the debt side but also potentially on the equity side of all these projects. We are planning to invest more in Central Asia, Africa and Southeast Asia and there's a number of projects that we're talking about pursuing together. I'm confident that our relationship that today is worth almost US$200 million can grow significantly in the coming years.

How can players like the OPEC Fund help get more private sector funding on board for climate and development work? What policy and regulatory reforms and risk-sharing tools are the most helpful?

Development finance institutions like the OPEC Fund are very important to help mitigate risk in some of the countries where we operate. One of the ways that we work together is to meet with the local leadership to clarify how private capital can come together and what we need.

Another priority is figuring out how we can jointly mobilize philanthropy. Every year US$2 trillion in donations go into very small projects. If that money went into infrastructure, power or water desalination projects in developing countries, imagine the catalyst effect that would have on the local economy and local entrepreneurship!

Another thing we can do is go and talk together to the rating agencies. Today there is a premium applied to investments in developing countries as opposed to OECD countries. If we want to finance the energy transition in emerging markets, we need an evolution. We need people to understand that, by doing these projects, we are actually increasing the stability and credit rating because we are favoring local economic development.

Should innovation play a larger role in development and climate action? How can we best apply new technologies, policies and processes to ensure maximum impact?

We always talk about sustainability and affordability, but speed is also important. If things happen too slowly, they cannot be a catalyst for anything. For speed, you need innovation — and it's not just technological. It's how we work together. It's the structure and product, where potentially you can blend debt equity and bridge loans. This is how you find solutions to become more competitive in local markets and achieve everything faster.