Rate Payers and Governments: Investment Models for Success


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Rate Payers and Governments: Investment Models for Success, EE Global 2007, Dr. Marianne Osterkorn, REEEP

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Rate Payers and Governments: Investment Models for Success

  1. 1. Rate Payers and Governments: Investment Models for Success Marianne Osterkorn REEEP International Director
  2. 2. Content 1. Overview about REEEP 2. Challenges for Finance Energy Efficiency 3. Finance Models and REEEP’s project contributions CDM ESCO Policies 4. Importance of information sharing and international collaboration
  3. 3. REEEP is a partnership of delivery 1. REEEP understands itself as a market facilitator and enabler and is profiled as a change agent towards clean energy systems 2. REEEP aims to reduce market barriers for renewables and energy efficiency systems in emerging markets and developing countries 3. REEEP believes in action on the ground via project activities that are targeted on policy improvements and innovative finance mechanisms 4. REEEP is recognized in the international political arena - G8, UNFCC, APEC
  4. 4. REEEP currently comprises 240 partners, among those all the G7 countries and many emerging economies Currently more than 240 partners: • 38 Governments • International organizations, NGOs and companies
  5. 5. REEEP delivers value via Regional Secretariats REEEP Regional Office REEEP International Russia and FSU REEEP Regional Office Secretariat North America REEEP Regional Office Central Europe REEEP Regional Office REEEP Regional Office Latin America & East Asia Caribbean REEEP Local Focal Point MEDREP REEEP Regional Office South Asia REEEP West Africa Focal Point REEEP Regional Office South East Asia & Pacific REEEP Regional Office Africa
  6. 6. REEEP currently undertakes 68 projects in 39 countries 5 1 4 17 1 1 2 1 9 1 2 1 3 16 2 2 2 1 1 21 1 2 1 2 2 1 1 1 3 2 5 14 3 2 2 1 1 13 2
  7. 7. REEEP’s quot;energy efficiency basket quot; contains a range of activities carried out jointly with other players 34 Regional projects currently address energy efficiency 3 Workshops in EE in buildings 1 EE Investment forum bi-annual Global Review on Energy Efficiency in 2008 Hosting the Energy Efficiency Coalition
  8. 8. 50% of increase in energy demand in the last 20 years has been absorbed by energy savings 160 IEA-11 140 50% 120 Additional energy use w ithout savings 100 exajoules 80 60 Actual energy use 40 20 0 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 Source: IEA Source: IEA
  9. 9. Economic growth can be de-linked from Energy Consumption Source: IEA
  10. 10. As the Danish example shows, the most impact can be achieved by combining RES and EE measures PJ Index 1980 = 100 120 180 100 160 80 140 60 120 40 100 20 80 0 60 1980 '85 '90 '95 '00 '05 1980 '85 '90 '95 '00 '05 Wind Straw Wood Biogas GDP, 2000 Prices Wastes Heat Pumps Gross Energy Consumption, Adjusted ..while at the same time the Between 1980 and 2005 increased production of energy from energy efficiency in the industry and renewable energy sources buildings sectors lead to a decoupling of increased tremendously energy consumption and GDP growth... Source: Danish Energy Authority
  11. 11. Energy Efficiency is increasingly attracting finance but is still facing major obstacles International Carbon Market is becoming a driving force ESCO business is becoming a billion dollar business Increased Access to public finance ( Green Investment Funds, WB CEIF, others ) Lack of incentives and attractive regulations The Finance sector still considers EE as high risk investments ( small, not asset based )
  12. 12. Energy Efficiency gains momentum in the Carbon market 1. CDM market in 2006 - $5.25 Projected Emission Reductions till billion; 2012 2. Only 97 energy efficiency Fuel Switch projects out of 844 registered Energy 7% Efficiency CDM projects - only 5% of Industrial 11% Gases emission reductions till 2012; 34% Methane & 3. 398 EE projects in the Cement pipeline out of 2700 - 11% of 20% Renewables 28% emission reductions till 2012; 4. CDM Gold Standard supports EE and RE projects to get better prices
  13. 13. Programmatic CDM will boost Energy Efficiency PCDM will allow multiple locations and different starting times of individual projects Procurement advantages can be materialized - CERs will cover up to 50% of the total costs Strong focus on end use energy efficiency – buildings, agriculture,appliances and DMS CERs for Kyoto compliance, no restriction for equipment providers Example: replacement of all lamps within Uganda
  14. 14. Financing Energy-efficient Street Lighting in India Financing and implementing energy efficient street lighting equipment at €1.5 million 5 Municipalities in the state of Madhya Pradesh Development of standard tender documents for selecting and contracting ESCOs to implement the project and CDM PDD documentation This standard documentation can be used by any municipality to contract ESCOs and finance efficient street lighting through CDM Project partner: Econoler
  15. 15. London- Beijing Olympic Games CDM project A CDM cooperation programme in China between the Beijing and London Olympics Reduction of emissions from the Games, and creation of infrastructure in China Global promotion of CDM project initiation at the time of Beijing 2008 – London 2012 Development of scaleable RE projects and financing facilities in China Project Partner: LOCOG
  16. 16. ESCOs are the best outsourcing tool for energy efficiency solutions ESCOs, especially in the public sector, have an increasing importance in the emerging market ( India, China, Mexico ) For SME’s ESCOs can provide important technical and financial support ESCOs have purchase advantages for equipment and power ESCOs understand the mode of energy efficiency projects
  17. 17. Create a replicable financing model for the use of ESCOs for energy efficiency solutions in Tamil Nadu Increase significant water supply through improvements in water infrastructure Create a replicable ESCO model which will facilitate investments and provide training to the involved stakeholders in the state of Tamil Nadu Assistance in financing to implement energy efficiency projects on the water supply systems of 45 towns with possibility of scaling up to 150 Case studies and tool kits to enable other states to replicate the financing approach Project partner: ASE
  18. 18. Establishing a ESCO in the commercial and industrial sector in Brazil Reduce energy intensity of big energy industrial and commercial customers of PETROBAS by up to 10% Undertake a business analysis of customer consumption data and establish a feasibility of an ESCO operation Establish a independent ESCO and a business plan to capitalize the identified market (attracting equity and debt financing, app 5 mio€) Establishing a model for big energy utilities to diversify into the sustainable sector (not core business) Project partner: Econoler International
  19. 19. Governments are the drivers of Energy Efficiency Implementation Setting of dynamic energy performance requirements for a wide range of products, buildings and services Appropriate and cost reflective price signals are essential ( targeted tax measures,internalizing of external costs, access to funding ) Standards and Labeling to enable consumers to make a choice ( Energy Star, top runner ) Education, information and awareness raising Public sector leadership ( public procurement )
  20. 20. Sustainable Energy Policy development in LAC region Increase penetration of RES and EE in the LAC region Create policy frameworks to facilitate transition to sustainable energy systems in Guatemala, Argentina,Mexico and Peru Assessment and analysis of existing policies and best practices in the region Regional consultation and awareness raising among key governments in the region during the UNIDO Inter ministerial meting in Montevideo Project partner: OAS
  21. 21. Transform the voluntary S&L system in India in a mandatory scheme Support the introduction of a mandatory S&L scheme in India Support the industrial change, harmonize standards and implement testing facilities Preparation of outreach materials and training NGO partners for public dissemination Project partner: CLASP
  22. 22. Government Procurement and Energy Efficiency in China Harmonization roadmap for energy efficiency government procurement in APEC economies with a focus on China. Roadmap for procurement policy harmonization in China and 3 to 5 selected APEC Countries; Review testing, labeling and procurement practices and and identify categories for harmonization. Harness government procurement power for energy efficiency market transformation. Project Partner: CSC
  23. 23. If we know where we stand we know where to move First Global Status Report on Energy Efficiency will provide currently missing data about energy efficiency implementation Provide an up-to-date characterization of the markets, policies & incentive systems and involved stakeholders Target OECD countries and the emerging market economies of Brazil, China, India, Mexico and South Africa Thermal and electrical EE, Demand-Side and Supply-Side EE Project partner: Ecofys
  24. 24. International Cooperation is important to make energy efficiency the mainstream Initiation of the Energy Efficiency Coalition : A REEEP initiative and driven by the industry - will comprise of a wide group of relevant stakeholders in energy efficiency Global approach with focus on OECD and Plus Five countries Sustainable platform which increases advocacy for EE and helps to bridge the gap between quot;talkingquot; and implementation Sharing of best practices and finance solutions Coalition will be launched at COP 13 end of 2007
  25. 25. Marianne Moscoso-Osterkorn REEEP International Secretariat Vienna International Centre Vienna, Austria Marianne.Osterkorn@reeep.org +43 1 26026 3425 www.reeep.org www.reegle.info
  26. 26. Performance/Credit Risk Guarantees and Financing Mechanisms for ESCO-structured EE Projects Develop and finance three ESCO- structured projects in Mexico based on “lessons learned” Creating risk guarantees to enable local banks to provide financing for ESCO-structured projects Introducing a mechanisms of replication of financing ESCOS Project partner: EPS Capital Corp
  27. 27. The total REEEP project portfolio is well balanced in terms of thematic and sectoral objectives Energy Efficiency 43% Finance 49% Renewable Energy 57% Policy 51%