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Elmar ElblingAccess to Energy Specialist
Asian Development Bank
Picture:ADBPilotProjectCobrador Island,Philippines
Seminar on Supporting SDG 7, Target 7.1“By 2030 ensure universal access to affordable, reliable and modern energy services”
Financing Energy Access
June22,2016
3.8 Billion Population in ADB’s DMCs
People without access to clean cooking
426 Million People without access to electricity
ENERGY ACCESS SITUATION IN ASIA-PACIFIC
2 Billion
Maximizing access to energy for all, especially the rural poor
Promoting clean energy - Energy efficiency and renewable energy
Promoting energy sector reforms, capacity building, and governance
PILLARS OF ADB’S ENERGY POLICY 2009
ADB’s RESPONSE: ENERGY FOR ALL (E4ALL)
Energy for All Initiative established 2008
Ø INTERNAL goal: Increase ADB’s investment in energy access projects and enterprises to scale up access to affordable, modern and clean energy among the regions poor using renewable energy technologies
Ø EXTERNAL goal: Energy for All Partnership to develop strategic partnerships and alliances with other stakeholders• 2009-15: MET TARGET of providing energy access to
100 MILLION people by 2015• 2015-20: PARTNERSHIP EXTENDED &
GOAL INCREASED TO 200 MILLION by 2020
$1.2 BillionEnergy Access Investment In 2015*
New connections to electricity for 300,000 households
Improved electricity service to about 3 million households
Improved gas or heating for over 40,000 households
ACCOMPLISHMENTS IN ENERGY ACCESS 2015TRACKING OF OUTPUTS
*Upfrom$400millionin2014
USD 6.4 billionTotal ADB investment
in energy access (2008-2015)
104.5 millionNumber of people
who will benefit from ADB’s energy
access investments
ACCOMPLISHMENTS IN ENERGY ACCESS 2008-2015
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2008 2009 2010 2011 2012 2013 2014 2015Impr
oved
ene
rgy
acce
ss (h
ouse
hold
s)
Ener
gy A
cces
s In
vest
men
t (in
billi
on $
)
Year
Number of Households Energy access investment
TRACKING OF OUTPUTS
CHALLENGES TO UNIVERSAL ENERGY ACCESS
*SE4ALLFinanceCommitteeReport2015
CurrentInvestment
USD9Billion
FundingGapofUSD
40Billionannually*
NEED FOR UNIVERSAL ENERGY ACCESS GLOBALLY: USD 49 billion annually*
More private sector investment needed
To achieve universal access to energy:
CHALLENGES TO UNIVERSAL ENERGY ACCESS
CHALLENGES TO UNIVERSAL ENERGY ACCESS
• No regulatory framework specific to off-grid & small scale applications• Lack of policy for private sector participation• Lack of technical standards for RE products• Lack of coordination causing lengthy permitting process • Lack of fiscal and non-fiscal incentives• Lack of market intelligence
EnablingEnvironment
Commercial & Technical Barriers
• Limited affordability of consumers• High upfront cost of RE technologies• Lack of Operation & Maintenance• Lack of capacity • High transaction cost for small scale operations• Lack of market intelligence
Conducive environment for private sector investments in RE off-grid projects
Business Models that make RE off-grid clean energy solutions commercially viable
CHALLENGES TO UNIVERSAL ENERGY ACCESS
Energy Access Companies
Investor & Finance
Institution
• High risk project - profile of consumers in off-grid areas/ Innovative RE technologies/ Regulatory risk
• Lack of technical capability to assess RE projects • Early stage clean energy companies with no proven track record• Lack of suitable collateral• Ticket size of energy access deals too small – high transaction cost
BARRIERS TO PRIVATE SECTOR FINANCING:
• No regulatory framework specific to off-grid & small scale applications• Commercially viable business models not easily to be replicated • Lack of capacity in business plan conceptualization & financial modeling• Lack of project preparatory funds• Lack of smart subsidies if required to achieve commercial viability • Lack of know-how to gain access to network of investor
I. PROJECT DEVELOPMENT
II. INVESTMENT FACILITATION
III. CAPACITY BUILDING
IV. KNOWLEDGE MANAGEMENT
ENERGY FOR ALL - IMPLEMENTATION APPROACHOVERCOMING BARRIERS TO ENERGY ACCESS
Energy for All Activities:
Incubates energy access companies/ business models from start-up to sustainability & helps to refine start-ups into bankable investment opportunities
PROJECT DEVELOPMENT FACILITY (PDF)
• Clean Energy: 30 kW solar PV plant and hybridizing with existing diesel gensets
• Energy Access: Extension of power supply from 8h to 24h per day/ Connecting all 244 households (up from 110)
• Strong Business Model: Collaboration with local Electric Cooperative (EC) for replication of business model to hybridize the large number of diesel mini-grids in other islands
• Strong partnership with government: collaboration with National Electrification Administration/tapping of financial incentive schemes
• Economic activity: Power for households and productive uses (marble industry, boat making)
• Sustainability: Operation & maintenance by a Electric Cooperative + Access to government incentive schemes for clean energy access projects
PHILIPPINESPILOT: SOLAR HYBRID SYSTEM IN REMOTE ISLAND
PROJECT DEVELOPMENT
PILOT: Hybridizing with Solar in Remote Island
• Clean Energy: Installation of 35kW solar power provides 95kWh of electricity/ day
• Energy Access: 83 households/ 25 businesses
• Strong Business Model: Private sector/ community participation/ local bank
• Strong partnership with government: collaboration with Alternative Energy Promotion Centre (AEPC)
• Aggregation: 3 dispersed remote villages combined in one larger project
• Economic activity: Power for households and productive uses
• Sustainability: Operation & Maintenance - one person residing on-site serving the 3 villages in case of power supply emergencies
NEPALPROJECT DEVELOPMENT
PILOT: SOLAR MINI-GRIDS IN RURAL COMMUNITIES
PILOT: Solar Mini-grids in Rural Communities
Investment Facilitation:
• To increase private sector participation in delivering modern energy to the poor
• Offers services to entrepreneurs like• Customized mentoring• Credit enhancement• Investor matching
• Offers services to investors like• Investment referrals• Due Diligence support• Risk Sharing Facility
INVESTMENT FACILTATION SERVICES OFFERED TO ENTREPRENEURS AND INVESTORS
A venue where energy access enterprises supported by the Energy for All Program are showcased to investors, financial institutions and other energy
access stakeholders.
ENERGY FOR ALL INVESTOR FORUM
• Held annually in June in Manila during the Asia Clean Energy Forum• Since recently also in-country events held with first forums in Nepal and Myanmar
PROJECT DEVELOPMENT FACILITY
14DEALSCLOSED
35INVESTMENTFACILITATION
14CUSTOMIZEDMENTORING
125PROJECTSSOURCED
© Asian Development Bank 2015
14%
7%
43%
14%
21%
Country Distribution of Investment Closures
NEP CAM IND PHI BAN
70PROJECTDEVELOPMENT
TOTAL INVESTMENT - USD 22M
PROJECT DEVELOPMENT FACILITY
FINANCIAL INNOVATION FOR CLEAN ENERGY ACCESS
Credit Enhancement Support• Collaboration with OIKO Credit India
• ADB is providing technical assistance and a risk-sharing mechanism to OIKO Credit India to encourage them to issue working capital loans to energy access companies in India.
• The first 2 working capital loans for energy access companies in the amount of USD 750,00 have been disbursed
PROJECT DEVELOPMENT FACILITY
• Collaboration with Microfinance Council of Philippines (MCPI)
• Technical assistance to 2 microfinance institutions (MFIs)
• Assessment of feasible energy loan products to incorporate in portfolio
• Focus on household and agro-processing appliances
Energy Lending Support:
UPSCALING OF ENERGY ACCESS PROJECTS
Clean Technology Fund (CTF)/ADB: Renewable Energy Mini-grid Fund and Distributed Power Generation Program
• The Program will deploy USD 30 million of investment capital over multiple private sector companies and impact funds to scale-up mini-grid investment in India, Indonesia and Philippines
• Co-financing facility with ADB Private Sector Operations Department
• Supported by a USD 3.5 million technical assistance advisory program, administered by ADB’s Energy for All Initiative
• Investment component includes senior debt, subordinated debt, guarantees and equity investments along ADB investment
CLEAN TECHNOLOGY FUND (CTF)/ ADBSAMPLE OF APPROVED CLEAN ENERGY ACCESS PROJECT
The Company Simpa Networks utilizes an innovative, pay-as-you-go business model using SMS credits to purchase solar home systems
ADB’s Role• USD 2.0 million equity investment
(2012)• USD 6 million ADB CTF debt financing
(2015)
Key Features• Mobile payments for solar energy
through SMS• Recurring energy expenditure is
transformed into an asset purchase• Increase access to energy in rural India• Positive impacts on health, education
and communications
I. More private sector investment needed to leverage limited public funds
I. Partnerships between public and private partners to blend funds, share risks and benefits
II. Innovative business models, finance mechanism, technologiesIII. Community involvement for project sustainability
II. Support to private sector through enabling regulatory framework and access to incentive schemes to allow commercial viability
III. Support to private and public sector through capacity building and project preparation assistance
IV. Aggregation of projects to decrease transaction costs
V. Buy-in and strong backing of governments for clean energy access required
OVERCOMING BARRIERS
CHALLENGES TO UNIVERSAL ENERGY ACCESS
ADB, through Energy for All, acts together with UNESCAP and UNDP as the Regional Hub for the global Sustainable Energy for All Initiative (SE4All).
ASIA-PACIFIC REGIONAL HUB
Universal Energy Access
Energy Efficiency
Renewable Energy
3 GOALS OF SE4ALL:
SUSTAINABLE ENERGY FOR ALL
Meeting SE4ALL CEO R. Kyte & ADB President T. Nakaoat Asia Clean Energy Forum 2016
FOR MORE INFORMATION:
www.se4all.org
Sustainable Energy for All – Asia Pacific
@SE4All_AsiaPac
SE4ALL Website & Social Media
www.energyforall.info
Energy For All Partnership
@energyforall
ADB Energy for All
ADB’s Energy for AllWebsite & Social Media
