EU backs fund focused on cutting energy wastage

LONDON, Nov 21 (Reuters): A private fund that plans to build power projects on sites such as hospitals and data centres to reduce energy wastage has secured backing from the European Union's investment arm.

The European Investment Fund (EIF) said it had invested 125 million euros in the 'Green Energy Solutions Fund', which is run by Sustainable Development Capital (SDCL).

The investment helped the fund hit its fundraising target of 650 million euros ($707 million) last month.

"We see a big market failure. Energy efficiency is an area where there are tremendous needs," EIF Deputy Chief Executive Roger Havenith told Reuters, describing the investment as EIF's first in a fund focused on energy efficiency.

Havenith said the investment would help advance EU policy priorities of tackling climate change, and the fund had agreed to deploy 66% of its capital inside the bloc's 27 member states.

"We step into funds where we see a particular added value and where we are not crowding out private investors," he said.

The EIF spends about 13-15 billion euros annually and targets individual funds of up to around 1 billion euros in size, with an average investment of 85 million euros.