Financing for Development Final Project by Mariana Silva

1. Energy Service Co-Fund (ESCO-F)
for Public Facilities
By Mariana Silva

2. Introduction to IDA PSW
• The World Bank Group has adopted a new road map – called the Forward Look. As
part of it, the WBG has revitalized the International Development Association
(IDA), the World Bank Group’s fund for the poor, through upgrades to its financing
model.
• Therefore, IDA has introduced a number of new windows and programs, such as
the Private Sector Window, to address the needs of de-risking projects in low
income countries.
• The PSW will contribute to IDA’s broader objectives of expanding private
investment in the poorest IDA countries alongside support to the public sector, and
IDA18’s special focus on scaling up efforts in FCS.
• PSW is an important innovation that creates space for IDA to support the
expansion of the private sector and mobilize private capital, to support achieving
the Sustainable Development Goals (SDGs)

3. Why to attract private sector?
• The private sector plays a pivotal role in economic development, supporting the creation of
pathways out of poverty that are essential to achieve the SDGs.
• It provides 90 percent of jobs and the biggest source of income for people living in IDA countries.
• A healthy and inclusive private sector raises workers’ productivity levels and links them to local,
regional and global value chains.
• It also offers opportunities for entrepreneurship, develops critical skills, expands learning
opportunities for the labour force, facilitates technology transfer, increases the tax base, and in
many cases, supports the public sector in designing and providing public services.

4. General Barriers
The challenges in developing the private sector in many IDA countries, and especially
those that are fragile and/or affected by conflict, are substantial. In many of these
countries:
• the domestic private sector is small and informal and
• constrained by weak macroeconomic and regulatory environment,
• infrastructure bottlenecks, and
• limited skilled labour force;
• the conditions for long-term responsible investors are poor
The PSW provides an opportunity to make strategic use of public resources to catalyse
private investments in these challenging markets by de-risking and mobilizing private
capital.
This is especially important given the limitations on IFC and MIGA capital, which are
constrained in their ability to significantly ramp up their own activities in the poorest
countries.

5. Country
• The model is designed for
any Fragile or Conflict State
listed by the FCV Group of
the World Bank using the
recommendations in the
publication: “Unlocking
Opportunities in Fragile
Markets” (Dublin, 2016)

6. Opportunity & specific barriers (1/2)
• Public buildings and facilities such as: schools, offices, hospitals, water pumping stations, etc.
operate in an inefficient way in the most of the cases with a obsolete technology, causing bad
quality of services, working conditions, and high energy cost for the government.
• Retrofits and energy-efficient technology replacement need a high upfront investment cost and it
is very difficult for the government to do such as an expenditure due to other the budgetary
priorities and scarce resources.
• Private investment in public buildings and facilities has legal constraints and high risks for investors.

7. Opportunity & specific barriers (2/2)
• The proposed model builds upon the WBG’s long-standing support for private sector development, and its understanding of the public goods and market
failures that constrain the private investments from entering poor countries and fragile markets.
• The model will enable IDA to operate in the space where public policy and private investment meet by leveraging the capacity and experience of IFC and MIGA
to support direct investments that grow the domestic private sector and create conditions for long-term responsible investment. It is anchored in the public
policy rationale that well-targeted public resources, when applied appropriately, can help promote public goods through supporting direct private interventions.
The demand for such support is strong as private investors are increasingly looking to invest in frontier markets but need risk mitigation.
Energy Service Co-Fund (ESCO-F)
 Independent, public and privately funded vehicle
 Low interest capital finance for the public sector
 Mission to reduce public sector carbon emissions through energy-efficient
infrastructure and provide better quality services
 Work with public sector clients including local authorities, educational
establishments, health and water pumping facilities

8. ESCO-F Focus
Minimise wasted energy – Controls
and awareness raising
PRIORITY ESCO-F Focus Pyramid
capital investment to reduce
energy & save carbonOnsite
Renewable
Energy
Efficient conversion –
Installing energy
efficient technology

9. Technologies
List of over 50+ energy
efficient technologies
supported
• Street and offices LED lighting
• Combined Heat and Power
• Combined Measures
• Boiler replacement
• Motors replacement
• A/C replacement
• other

10. ESCO-F Model: recycling fund
IDA
Funding
Private
Partner
Funding
Ring-fenced
client
sustainability
fund
Energy
efficiency
projects
$ Energy Saving
Public Partner
co-investment
@ blended “low”
interest rate
low
interest rate
higher
interest rate
MIGA
Guarantee if
losses

11. Energy
Audit &
Feasibilit
y Study
Application
&
Approval
Procurement Implementatio
n
Monitorin
g &
Repayme
nt
Business case
checks
Mobilization
activities
Workshops, trainings and
calls for advice
Re-Payments
Phase works over
financial years
Energy
Savings
Public Partner
investment
Fund investment
Fund
repayments
Public Savings
MIGA Guarantee
if losses
Technical Services by the ESCO-F

12. Technical checking of projects
• Reviewing project information and calculations
• Liaising with clients
• Ensuring standard processes are completed
Internal and external technical support
• Answering technical queries – internal and external
• Developing support material – Compliance Tools
• Reviewing new technologies
• External technical contractors
Technical Services (1/2)

13. Technical Services (2/2)
Provideanalysis work on fund performance
• Financial and Carbon reporting support
• Externally requested numbers e.g. government, civil society
• Manage online reporting systems for Recycling Fund
Additional support
• Curating and development of a website and knowledge sharing area content
• Assist development of external marketing material
• Presentations and client facing events
• Research projects

14. Benefits
• Promote de private investment in public buildings
• De-risk of energy investment projects
• Obtain energy-cost savings for the public expenditures
• Conservation of energy and reduction of CO2 emissions
• Promote the energy efficiency and renewable energy in the
region
• Better infrastructure in public buildings
• Job creation within local suppliers and implementers
• Create energy efficiency awareness