Unlocking financial opportunities for sustainable development in Guatemala by increasing access to affordable and clean energy A financial solution on the framework of the International Development Association Private Sector’s Window (PSW)

1. A financial solution on the framework of
The International Development Association
Private Sector’s Window (PSW)
Unlocking financial opportunities for sustainable
development in Guatemala by increasing access
to affordable and clean energy
By
Lucia Merino

2. Contents
1. Sustainable development energy’s commitment
2. Guatemala country profile
3. Key elements defining the problem of access to renewable and clean energy
4. Financial solution coming from the International Association for Development (IDA-PSW)
5. Obstacles for unlocking financial IDA-PSW opportunities
6. Benefits for Guatemala to participating in IDA-PSW mechanism
Acknowledgments

3. Sustainable development energy’s
commitment
• Universal access to affordable, reliable and
modern energy services
• Increase substantially the share of
renewable energy in the global energy mix
• Double the global rate of improvement in
energy efficiency
• Enhance international cooperation to
facilitate access to clean energy research
and technology, including renewable
energy, energy efficiency and advanced
and cleaner fossil-fuel technology, and
promote investment in energy
infrastructure and clean energy technology
• Expand infrastructure and upgrad
technology for supplying modern and
sustainable energy services for all
http://www.un.org/sustainabledevelopment/sustainable-development-goals/
By 2030
Affordable and Clean Energy
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4. Affordable and clean energy requires
transitioning
FROM
Fossil fuels such as
coal, oil or gas major
traditional sources of
electricity production.
Use and further
develop of hydropower
sources of electricity,
biomass, Eolic, among
other. Committing to
sourcing 100% of
operational electricity
needs from renewable
sources.

5. Role and benefits of renewable and clean energy
in Development
Affordable and clean energy: WHY IT MATTERS. http://www.un.org/sustainabledevelopment/wp-content/uploads/2016/08/7_Why-it-Matters_Goal-7_CleanEnergy_2p.pdf
Business
Infrastructure
Jobs creation
Agriculture
Medicine
Health
Education
Communications
High technology

6. Guatemala country profile 2

7. 16.3 – 21.4 Population 2015 and 2030 (millions)
51.6 Urban population (% of total)
72.1 Life expectancy at birth (years)
2.1 Children under 5 (millions)
9.6 People 15-64 (millions)
3.3 Total Fertility Rate (Births per woman)
24.3 Infant Mortality Rate (Per 1,000 live births)
0.6 HIV prevalence (% ages 15-49)
7,063 Gross National Income (US$ per capita, PPP)
2.3 Public Health Expenditure (% of GDP)
0.64 Human Development Index (HDI)
0.45 HDI adjusted by inequality
125 Human Development Rank
0.48 Gini-coefficient (Income inequality)
2.8 Public Education Expenditure (% of GDP)
79 Literacy rate (% ages 15 and older)
Guatemala country Profine. Wb. http://databank.worldbank.org/data/download/GDP.pdf
Human Development for Everyone. 2016 Report. PNUD http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf
Socio-economic aspects
Most data refers to a period around 2015
PPP: Estimated using the purchasing power parity
MEDIUM HUMAN DEVELOPMENT COUNTRY

8. 118.5 Gross Domestic Product (US$ Billions)
10.4 Tax revenue (% of GDP)
29.4 Taxes on income, profits and capital gains (of total Tax revenue)
1.8 Foreing Direct Investment (% of GDP)
10.33 Remittances in flow (% of GDP)
59.8 Employment to population ratio (% ages 15 and older)
47.1 Vulnerable employment (% of total employment)*
27.1 Internet user (% of total population)
111.5 Mobile phone suscriptions (per 100 people)
0 Research and development expenditure (%of GDP)
Financial and income indicators
Guatemala country Profine. Wb. http://databank.worldbank.org/data/download/GDP.pdf
Human Development for Everyone. 2016 Report. PNUD http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf
LOWER MIDDLE INCOME COUNTRY
*workers

9. 27.9 - 32.7 Fossil fuel use (1990 – 2013) (% of total energy use)
66 Renewable energy consumption (% of total energy use)
4.3 Alternative energy (% of total energy use)
33 Forest area (2015) (% of territory)
-25 Change in forest area (1990-2015) (% forest area in 1990)
2.6 Natural resource depletion (% of GDP)
Guatemala country Profine. Wb. http://databank.worldbank.org/data/download/GDP.pdf
Human Development for Everyone. 2016 Report. PNUD http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf
ENVIRONMENTAL SUSTAINABILITY
*Percentage of employed people engaged as unpaid family
workers and own account workers
Energy sector indicators and information related
Electric Power consumption
(KWN per capita) - Guatemala
http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC?loc
ations=GT&view=chart

10. Key elements defining the problem of access to
renewable and clean energy in Guatemala
• Inefficacies. Energy is strategic, both for the quality of life and for supporting productive activities, but it is characterized by the
presence of polluting and inefficient generation and consumption patterns.
• Main sources of energy used. The national energy equation shows that consumption of firewood accounts for 63% of final energy
consumption. Next in importance is diesel (12%); Gasoline's (8%); followed by fuel oil and electricity (4% respectively), and finally,
bagasse cane and liquefied petroleum gas (propane gas) with 3%. Main source of energy demand is firewood, besides to a
deforestation rate of 2.1% annual.
• Drought effect. Even with the potential for hydroelectric resources, drought has raised production costs, as it requires increased fuel
consumption in thermoelectric plants, which in turn implies losses for generating companies and, according to the fee model’s,
increases in the invoice to the consumer. In Guatemala, 16 of the 22 departments reported damages associated with the water
deficit.
• Limited capacity. Electricity is generated mainly through hydroelectric plants, with a limited percentage of installed capacity (52%);
thermal power plants (40%) and generators the remaining 8%.
• High consumption of firewood. Due to the majority of population lives in the rural area, most of which in poverty and lack of access
and availability to other energy sources.
• Low coverage of electricity. The electricity service has reached a coverage of 42%, being one of the lowest in Latin America.
Guatemala had the double challenge of ensuring the provision of the energy needed for its development at the same time that,
reducing the social, economic and environmental impacts associated.
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11. • IDA focuses on less developed, low-
income countries. Follow business
Model of MDB
• Offers grants and concessional loans;
least expensive forms of financing
(de-risking projects in low income
countries)
• Enabled to leverage its equity by
raising funds in debt markets
• PSW is a pilot basis of a US$2.5
billion in IDA18 Replenishment
4
Financial solution coming from International
Association for Development (IDA-PSW)
MDB: Multilateral Development Banks

12. Blended Finance Model for unlocking
opportunities in Guatemala
• Ambitious sustainable development goals scope requires
more ambitious financing (public, private, and
“blended”).
• Each element of the post-2015 agenda will have its own
required mix of public and private financing.
• ODA assistance, by its own, would not meet financing
needs, even if gross national income increases in all
developed countries.
• ODA could, through leverage and catalytic support, will
help to mobilize substantially more private capital.
• Innovative approach
• Overlaps private
capital profits for its
owners, while also
producing significant
development
outcomes post-2015
• Good for business
and good for people

13. Obstacles for unlocking financial IDA-PSW
opportunities
• Restrictive legal and regulatory frameworks; lack of information. IDA helps governments to create an
enabling environment for business and private investments. Also, prepare projects; build strong project
pipelines, and lower existing informational barriers.
• Lack of guarantees. IDA will continue to explore different ways of risk-sharing with the private sector.
Guarantees are a key instrument that can help mobilize capital for projects that are viable, but will not
proceed otherwise unless investors and lenders are protected against certain risks or catastrophes. By
reducing project risk, the guarantees expand access to funding for a broader universe of investors and
savings.
• Competitive domestic markets, especially capital markets that respond to demands are central to the
sustainability of development gains and advancing inclusive economic opportunities.
• In summary, the rule of law has to be respected, it is need it to give investors in the country a lot of
confidence when they see stable, legal, and regulatory environments as well.
• Long term asset and it does require some form of payment to pay back the money that is used to build the
infrastructure in the first place.
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14. Benefits for Guatemala to participating in
IDA-PSW mechanism
• The stagnation of public finances; the tax revenue crisis; and the low ratio Tax-GDP, are obstacles for
thinking in public sector funding.
• Lot of unmeet needs on the social sector. The government needs to to attend and prioritize public
resources to resolve social needs that afects today the people.
• Large amount of renewable natural resources, which have a great energy potential and is an attractive for
private investment.
• Access to affordable and clean energy requires important infrastructure investments that posible the
goverment could not afford in the short, medium or long term if compared with other inmediate needs.
• IDA-PSW is designed for low-income countries with low-cost loans and grants, which payments could be
absorbed by the country in the medium and long term.
• The expected multiplier effect of the IDA-PSW investment is that energy investment will generate
development and wealth, improving revenue and public capital to deal with debt and reinvest in other
development projects.
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15. Acknowledgments
During the development of the presentation, were used, for academic and illustrative purposes, information generated by staff and
partners of the World Bank Group and other public and private institutions (national and international), which are publicly accessible
and available on the internet; also another illustrations and pictures of free access located en la internet. Actually they were many but
the most used are mentioned below:
Financing for development. World Bank Online course: videos, scripts and resources. edX Plataform 2017. Specially form Joaquim Levy, Susan McAdams, Richard Abadie and Jay
Collins. https://courses.edx.org/courses/course-v1:WBGx+F4D01x+1T2017/courseware/2b14613373f045e6829ccf6c18496e26/9b27c497b97649d2b14f25e07a60df6c/
Human Development for Everyone. 2016 Report. http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf
The World Development Indicators. Energy production and use tables. http://wdi.worldbank.org/table/3.6#
El Estado de la Region, 2016 Report. http://www.estadonacion.or.cr/erca2016/assets/cap-5-erca-2016-ambiental.pdf
The World Bank Cata. Electric Power Consumption. http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC?locations=GT&view=chart
Reporte de Generación de electricidad a partir de biomasa. http://www.fao.org/docrep/t2363s/t2363s0w.htm
Sistema de energía eléctrica en Guatemala. http://www.deguate.com/artman/publish/ecofin_articulos/Sistema-de-energia-electrica-en-Guatemala.shtml#.WOJcTDs1-01
THANKS!