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ARE initiatives on Finance Access
21 Sep 2015, Milan
Source:FRES
David Lecoque, ARE Policy and Business Development Office...
Agenda
2
1. Introduction to ARE
2. Rural Electrification Markets: Stabilizers and main challenges
3. OFID- ARE Cooperation...
ARE: Who we are, what we do (1/2)
3
Please see www.ruralalec.org
• International business association representing the
dec...
ARE: Members mainly from industry representing
the full value chain for enabling energy access (2/2)
• We partner with international and national organisations, projects and initiatives, the
media and other industry platfor...
Rural Electrification Markets:
Stabilizers and main challenges (2/5)
Source: Global Tracking Framework 2015 Summary Report...
Rural Electrification Markets:
Stabilizers and main challenges (3/5)
7
0 10 20 30 40
Up to 1 Mio
Above 50 Mio
Total progra...
Rural Electrification Markets:
Stabilizers and main challenges (4/5)
8
• Half the programmes offer technical assistance, p...
Rural Electrification Markets:
Stabilizers and main challenges (5/5)
9
• TOTAL financial assistance/investment: EUR 1.4 bn...
OFID-ARE Cooperation: Risk mitigation crucial for upscaling
Decentralised clean energies is a highly promising market (1/2...
11
OFID- ARE Cooperation: Risk mitigation crucial for upscaling
Decentralised clean energies is a highly promising market ...
12
Conclusions: Way forward towards reducing inequality
• Partnerships to allow local business development in DCs:
• Opera...
Conclusions: Why & how to get engaged
• Why should you get engaged?
• Huge market and demand
• Huge renewable energy poten...
Alliance for Rural Electrification
Rue d’Arlon 69-71
1040 Brussels, Belgium
are@ruralelec.org
www.ruralelec.org
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David Lecoque, Alliance for Rural Electrification

ARE initiatives on Finance Access

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David Lecoque, Alliance for Rural Electrification

  1. 1. ARE initiatives on Finance Access 21 Sep 2015, Milan Source:FRES David Lecoque, ARE Policy and Business Development Officer Workshop: “Innovative Finance for Access to Energy”
  2. 2. Agenda 2 1. Introduction to ARE 2. Rural Electrification Markets: Stabilizers and main challenges 3. OFID- ARE Cooperation: Risk mitigation crucial for upscaling 4. Conclusions
  3. 3. ARE: Who we are, what we do (1/2) 3 Please see www.ruralalec.org • International business association representing the decentralised energy sector working towards the integration of renewables into rural electrification markets in developing and emerging countries • Enabling improved energy access through business development support for more than 90 members along the whole value chain for off-grid technologies by targeted advocacy and facilitating access to international and regional funding • Global platform for sharing success stories and best practices to provide for rapid implementation of available RE technologies in order to effectively advance access to energy and services • Created in 2006 by companies and pioneers with decades-long experiences
  4. 4. ARE: Members mainly from industry representing the full value chain for enabling energy access (2/2)
  5. 5. • We partner with international and national organisations, projects and initiatives, the media and other industry platforms • ARE is the only business association partner of the UN Sustainable Energy for All (SE4All) initiative Rural Electrification Markets: Stabilizers and main challenges (1/5) Selected international organisations with which we have formalised cooperations 5
  6. 6. Rural Electrification Markets: Stabilizers and main challenges (2/5) Source: Global Tracking Framework 2015 Summary Report xii Annual investment Universal access to modern energy services Universal access to modern energy services Doubling the global rate of improvement in energy efficiency Doubling the share of renewable energy in the global mixa Source Electrification Cooking Energy efficiency Renewable energy Total Actual for 2012b 9 0.1 130 258 397 Required to 2030 c 45 4.4 560 442–650 1.051– 1.259 Gap 36 4.3 430 184–392 654–862 a. This is the range for significantly increasing the share of renewable energy in total final energy consumption. b. The total assumes 2010 investment in access figures for 2012. c. Estimates are derived from various sources: Energy access, electrification: SE4ALL Finance Committee Report, World Bank (2014); Energy access, cooking: Energy for All Scenario, WEO (IEA, 2012); Energy efficiency: 450 scenario, WEO (IEA, 2014); Renewable energy lower bound: WEO 450 (IEA, 2014), corresponds to a 29.4 percent renewable energy share in total final energy consumption by 2030; Renewable energy upper bound: REmap 2030 (IRENA, 2014), corresponds to a 36 percent renewable energy share in total final energy consumption by 2030.
  7. 7. Rural Electrification Markets: Stabilizers and main challenges (3/5) 7 0 10 20 30 40 Up to 1 Mio Above 50 Mio Total programme budget (EUR) 48% 25% 27% Types of support offered Technical assistance Financial assistance / investment Other • Most programmes focus on technical assistance (48%), followed by other support (27%) and financial assistance/investment (25%). • A clear majority of support programmes have a budget up to 10 Mio EUR, followed by budgets above 50 Mio EUR and between 10 and 50 Mio EUR. • Two-thirds of these programmes are operational, one-third being in the planning stages.
  8. 8. Rural Electrification Markets: Stabilizers and main challenges (4/5) 8 • Half the programmes offer technical assistance, prioritising feasibility study support, business plan development and technical, environmental and social assessment of projects. • Some also support financial modelling, market and risk assessment and the marketing of projects to financiers and buyers, as well as e.g. GIS maps and operator training. • A quarter of the programmes propose financial assistance or investment. Results show that grants are most commonly used (35%), followed at a distance by loans (17%), equity (15%) and other financial mechanisms (33%) such as hybrid capital, convertible grants, venture capital, guarantees and other types of credit enhancement. • These instruments are usable either individually or in combination, and may require (co-)investment by a private project developer or third party. • Find out more at http://www.se4all.org/minigridshio/minigridshiowebtool/
  9. 9. Rural Electrification Markets: Stabilizers and main challenges (5/5) 9 • TOTAL financial assistance/investment: EUR 1.4 bn • Public sector initiatives: • 19 providers: EUR 1.2 bn • 3 providers: unkown • Private sector initiatives: • 10 providers: EUR 155 mio • 7 providers: unkown • Nonprofit initiatives: • 4 providers: EUR 70 mio • 1 provider: unknown Public sector 84% Private sector 11% Nonprofit 5% Financial Assistance/Investment Per Source (known amounts only) Focus on the sources of financial assistance/investment (est. approx. figures)
  10. 10. OFID-ARE Cooperation: Risk mitigation crucial for upscaling Decentralised clean energies is a highly promising market (1/2) 10 • Absolute population living without electricity is 1.1 bn. The population to be electrified by 2030 is today’s access deficit of 1.0 bn plus the projected population growth between 2012 and 2030 of 1.5 bn. By region, the deficit remains overwhelmingly concentrated in Sub-Saharan Africa and South Asia. (GTF 15 SR p.2) Many more suffer from unreliable power supply. • To achieve universal access to electricity, an average annual investment of USD 45 bn is required (compared to USD 9 bn estimated in 2012). More than 60% of the incremental investment required would have to be made in Sub-Saharan Africa and 36% in developing Asia (GTF 14 O p.42). • Specifically for Sub-Saharan Africa, of the population gaining access in rural areas, mini- and off-grid solutions account for 70% of new access-related demand over the period to 2040 (IEA Africa Energy Outlook 2014). • Key characteristics: small-medium scale (pico, SHS, mini-grids), any renewable energy technologies and their intregation possible but depending on local conditions; at present more focus on solar, mini-grids and energy storage, while there is an increasing interest in small hydro, small wind and bioenergy and sustainable business models.
  11. 11. 11 OFID- ARE Cooperation: Risk mitigation crucial for upscaling Decentralised clean energies is a highly promising market (2/2) • Objective: to identify / to implement up to 2-5 mini- grid installation / hybridisation in the developing world within 24 months • OFID Support: Grant of appr. USD 1.0 Mio. to assist in de-risking mechanism for business ventures • ARE has implemented a ready-for-purpose working structure Milestone Date Result OFID – ARE Signature MoU 4 Nov 2014 ARE Publication of Call for Proposal 10 Febr 2015 Deadline for submission of applications 17 Apr 2015 ARE Administrative Assessment Report 29 Apr 2015 ARE Evaluation Report 08 Jun 2015 ARE Grant Application 19 Jun 2015 OFID Governing Board Decision (Approval of 4 projects in Africa and Asia) 19 Jun 2015 Implementation Phase (Bangladesh, India, Mali and Mozambique) Oct 2015 – Sep 2017
  12. 12. 12 Conclusions: Way forward towards reducing inequality • Partnerships to allow local business development in DCs: • Operational excellence of / by managing energy service companies • Segmentation of rural electrification market with different financing requirements: • Solar lanterns & Pico systems (soft loans and commercial debt/equity) • SHS and mini-grids (blend of external subsidies and soft loans) • Policies that enable private sector initiatives: • Legal framework in place for rural electrification • Sustainable tariff level arranged prior to implementation • Market-near financing approaches (e.g. ElectriFI by the European Commission) • More efforts needed from global development and finance organisations to mitigate risks related to regulatory, economical, fiscal, policy issues • Financiers need to assess renewable energy projects with a long term perspective and bear political, financial and operational risks • Rural electrification should come along with energy saving appliances
  13. 13. Conclusions: Why & how to get engaged • Why should you get engaged? • Huge market and demand • Huge renewable energy potential • Huge relevance of independent solutions based on decentralised renewable energy («off-grid») • Just makes sense from a business and CSR point of view • How can you get engaged? Get in touch with ARE! • Find partners to implement your project • Linking financiers with project developers • Realise your CSR objectives • Showcase your green efforts • Help us advocate decentralised RE generation in developing countries 13
  14. 14. Alliance for Rural Electrification Rue d’Arlon 69-71 1040 Brussels, Belgium are@ruralelec.org www.ruralelec.org Follow us online Click here to download the ARE Application Form Click here to subscribe to the ARE newsletter and receive the latest news on upcoming activities Please visit us at SAIREC 2015 in Cape Town (SA) on 4-7 Oct 2015! AREBoardSource:ARE David Lecoque, ARE Policy and Business Development Officer (d.lecoque@ruralelec.org)

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