Taken from http://www.guardian.co.uk
John Vidal, environment editor
Thursday 18 November 2010 14.25 GMT

Britain today pledged to spend several hundred million pounds to finance a series of private sector green energy initiatives intended to bring electricity to some of the poorest African and Asian households.

The international development secretary, Andrew Mitchell, said the money, which would come from funds promised at the Copenhagen climate summit last year, would go to projects proposed by industry and could be expected to raise £9 for every £1 committed by government.

"In Africa, a potential new fund could see up to 500MW of renewable energy per year from 2015 - enough to provide for over 4 million rural households. In Asia the project could generate 5GW of new renewable energy and create 60,000 jobs," he said.

The projects – or the countries - have not been decided, but are expected to include wind, solar and hydro-electric power. Companies will be invited to come forward with proposals.

t is understood that rather than investing directly in renewable projects, British money will be funnelled in the form of grants through private equity funds, creating a market that would then invest in low carbon private sector projects.

In Africa, it would go to buy renewable power at guaranteed prices to generate investment in renewable energy. Payment would only be made on the delivery of contractually agreed energy supply.

But the intention to use grant money to invest in private sector companies was immediately questioned by the World Development Movement (WDM).

"Private sector involvement secures profits for the companies involved - not benefits for the poorest people. We have seen this time and again, where corporations reap the rewards from delivering basic services in developing countries. It is always the company that benefits not the people who need and use the services," said a spokesman.

He added that the great majority of Britain's £1.5bn of climate funds so far announced were in the form of loans, not grants. "We agree that a low carbon revolution is needed, but this is not the way to get there. The UK government is pushing developing countries into further debt through providing loans to help developing countries cope with climate change."

The source of money offered to developing countries to adapt to climate change will be one of the key issues raised at the coming global climate summit, which opens in 10 days time in Cancun, Mexico.

Some of the world's leading financiers last week suggested that the money could be raised from a mixture of public and private sources. But developing countries are keen to see as much as possible from public funds, which they argue is more certain than the markets.

Rich countries have committed to raising $30bn a year by 2012 for developing countries to adapt to climate change, rising to $100bn a year from 2020.

Last week, the World Bank and the Asian Development Bank announced that they were lending Bangladesh nearly $600m. More than $100m of this is expected to come in the form of loans from the UK government.