Clean Energy Finance and Investment Roadmap for India, Workshop I on MSME Energy Efficiency, 14 March 2022

1. Monday, 14th March 2022 | 3:00 – 6:00 pm (IST)
Clean Energy Finance and Investment (CEFI) Roadmap for India
Workshop I on MSME Energy Efficiency
Poonam Sandhu
NRDC
psandhu@nrdc.org
John Dulac
OECD
john.dulac@oecd.org

2. Clean Energy Finance and
Investment Roadmap
Workshop I: ENERGY EFFICIENCY FINANCE FOR MSMES
2
9 March 2022
John Dulac,
OECD
&
Poonam Sandhu,
NRDC

3. • Enabling the energy transition
requires considerable capital for
clean energy
• Targeted use of public, climate
and development finance can
enable a pipeline of bankable &
investor-ready projects
• A roadmap can prioritise actions
to mobilise stakeholders and
crowd-in private capital
3
CEFI Roadmap context
USD 300b+
needed to finance India’s
clean energy targets to 2030
~3x
increase over current
investment levels

4. The Roadmap process is designed to:
• bring together stakeholders through a series of
consultations and three workshops
• assess critical barriers and prioritise solutions to
improve clean energy finance and investment
(Workshop I)
• deliberate financial tools and investment vehicles to
raise capital at suitable scales (Workshop II)
• agree on recommendations & steps forward for
actions to unlock finance and investment over the
next 3-5 years (Workshop III)
4
CEFI Roadmap context

5. 5
Workshop I
Today’s discussions will:
• follow Chatham House rules (followed by workshop summary for feedback)
• recap key considerations and input from stakeholder consultations
• aim to identify solutions to overcome barriers to clean energy finance and investment
• prioritise actions to enable a pipeline of projects in line with 2030 ambitions
• Additional stakeholder consultations to follow Workshop I and build upon targeted solutions
• Workshop II will subsequently look to tailor investment vehicles and deliberate sources of
financing to deliver on these solutions

6. 6
Recap: stakeholder consultations
Stakeholder consultations pointed to a number of challenges:
• increasing awareness and appetite for efficiency (beyond increased production capacity)
• sector/cluster mapping and data is process intense but needs continual improvement
• training and capacity building is critical element but also time and resource-intensive
• lack of access to affordable financing and suitable solutions (e.g. cash-flow based finance)
• high risk perception with MSME profiles (e.g. small balance sheets, lack of collateral)
• can be high transaction costs (e.g. due diligence, hedging costs, guarantees, etc.)

7. 7
Recap: stakeholder consultations
Stakeholders consultations also pointed to opportunities to:
• increase continuity and replicability of existing knowledge & initiatives
• support bankable projects (e.g. performing investment grade energy audits)
• lower cost of finance (e.g. through targeted guarantees like first loss facility)
• improve data (e.g. on asset performance) to address lender confidence and risk assessment
• reduce transaction costs (e.g. through standardised documentation and/or technology list)
• unlock market-based solutions (e.g. Smart Joules) and offer services and/or products at scale
• enable suitable scales for capital markets (e.g. through aggregation & securitisation)

8. 8
Recap: stakeholder consultations
End-to-End Efficiency
(4E) programme
BEE SME
programme
GEF-World
Bank project
GEF-UNIDO
project
EESL-UNIDO Market Transformation
for Energy Efficiency
World Bank - SIDBI Partial
Risk Sharing Facility
BEE Partial Risk Guarantee
Fund for Energy Efficiency
BEE Grading of Energy
Efficiency Projects
BEE Energy Efficiency
Financing Platform
Bilateral lines of credit
(e.g. JICA, KfW, AfD)
TERI -
SAMEEKSHA
MSME Financial
institution
Lack of knowledge and/or
incentive to seek efficiency
Lack of capacity / local provider
to implement projects
High cost of finance
and/or need for collateral
Lack of knowledge and/or
incentive to finance efficiency
Lack of data / capacity
to evaluate projects
High cost of transactions
and/or need for risk mitigation
SIDBI Credit-Linked Capital
Subsidy Scheme (CLCSS)
1
5
6
3
2
4

9. 9
Poll on priorities
Group poll: what are the top 3 issues you see as critical priorities for MSME energy efficiency?
1) Raising awareness and addressing amount of “hand holding” to enable demand/appetite
2) Data & mapping including information on asset performance/project finance, etc.
3) Training & capacity building for preparing projects/documentation as well as for
lenders/service providers (e.g. on investment-grade energy audits)
4) Cost of finance including offering & terms of finance (e.g. upfront collateral, cash-flow finance)
5) Transaction costs such as due diligence, need for guarantees, hedging cost, etc.
6) Effective & scalable business models (including service/technology providers, auditors, etc).

10. 10
Poll results