Workshop on financing for renewable energy in Small Island Developing Sta tes (SIDS)

Transcription

1 Jointly organized by IRENA and Ministry of the Environment, Japan (MOEJ) Workshop on financing for renewable energy in Small Island Developing Sta tes (SIDS) Henning Wuester, Director of Knowledge, Policy, Finance Centre, IRENA 3 August 2015 Kuala Lumpur, Malaysia

2 Susta ina ble Development Goa ls Goal 7: Ensure access t o affordable, reliable, sust ainable and modern energy for all Objectives by 2030: ACCESS ensure universal access to affordable, reliable and modern energy services RE - increase substantially the share of renewable energy in the global energy mix EE - double the global rate of improvement in energy efficiency 2

3 IRENA's Global Renewable Energy Roadmap (REmap 2030) Doubling the share of renewable energy implies a tripling of the share of modern renewables 3

4 REma p 2030 findings The global RE share can reach 36% by This is possible at negligible additional cost. Savings of up to USD 740 billion per year by Reduction in annual CO2 emissions by 8.6 Gt by Energy efficiency and improved energy access necessary to allow for the share of renewables to reach 36%. Business-as-usual will only result in an increase of this share to 21% by

5 Investment required to achieve the REmap goals REmap requires more than doubling of average investment Private finance needs to be mobilized to bring RE investments to scale 5

6 Case for small-scale RE in SIDS Economic Case RE is now the economic solution for mini-grids RE on islands Targets Solar PV with and battery policy measures storage can increase RE penetration by more than 20% on islands Strong wind, solar, and geothermal potential Climate finance Social Case Energy access to rural / isolated areas 4.5 million jobs in the off-grid electricity sector alone by Increased 2030 An alternative source of income for rural communities Resilience for energy to security energy; share of RE; better access achieve SDG 6

7 IRENA s work on SIDS 7

8 A study on the status of public financing for RE projects in SIDS The Selected study public identified: funds 30 public Asian funds available Belgian Investment for RE projects Canadian Climate in SIDS Abu Dhabi Fund for Development 24 projects/programmes Fund developing that were Private financed Sector in part Partnership or in full by these Funds funds Danish Climate Investment Fund (KIF) Development Emerging African Infrastructure Fund (EAIF) Each fund s eligibility criteria and funding sources Specific financing challenged faced by SIDS Planned RE projects and programmes in SIDS GEF Trust Fund And analysed: Infrastructure Fund (InfraFund) Geothermal Risk Mitigation Facility for Eastern Africa Interact Climate company for countries (Bio- Invest) Energy and Environment Partnership South and East Africa Global Climate Change Alliance (GCCA) Fund for the Suitability Change of Facility each planned Climate Initiative project Energy with Fund the selected funds S.A. International (ICI) Asia EU Africa Infrastructure Trust Fund (EU- AITF) Green Climate Fund (GCF) Reasons for underutilisation of the selected funds Project Preparation Development Fund (PPDF) Seed Capital Ways to Assistance improve funding Change Fund rates in SIDS Facility (SCAF) Special Climate (SCCF) MGM Sustainable (MSEF) SUNREF Green Lending Scheme Clean Energy Financing Facility - ADB (CEFPF) Evolution One InfraCo Africa Multilateral Investment Fund (MIF) Scaling Up Renewable Energy Program for Low Income Countries (SREP) Climate Investment French Global Environment Facility (FFEM) Infrastructure Development Fund (IDF) NAMA Facility Sustainable Energy Fund for Africa (SEFA) 8

9 Funding patterns of the selected public funds Various types of financial instruments, including loans, grants, equity, quasi-equity, and guarantees Most of the funds can finance projects in several countries Multiple funding entities complement each other for one project Public funds generally play a minority role in RE project financing Typical investment horizon max. 10 years 9

10 Public funding status in SIDS 30 public funds financed 24 RE projects and funding programmes in SIDS Strongly public-driven environment & high grant component Some direct financing of RE projects (9/24), some supporting project development and building enabling environment (11/24) RE MIX OF FUNDED PROJECTS IN SIDS Mixed 25% Wind 4% Bioenergy 13% Geothermal 4% Hydro 17% Solar 37% INSTALLED CAPACITY DISTRIBUTION OF FUNDED PROJECTS > 5-30 MW 32% < 1 MW > % MW 5% > 1-5 MW 58% > 80 MW 0% 10

11 Barriers to financing RE projects in SIDS Investors perspective Lack of legal framework and policy measures High public debt rates, limiting the loan absorption capacity Low energy access rates and lack of suitable energy infrastructure Remoteness of the off-grid installations in rural communities Low volume of electricity demand and small-scale investments High perception of risks 11

12 Barriers to financing RE projects in SIDS Local/domestic project sponsors perspective Limited access to finance (high upfront cost) Limited capacity of preparing and developing RE projects High costs of project development and due diligence (high transaction costs) Lack of business models for financing and operating (ensuring stable revenue streams) Difficult coordination with and between different public organizations High cost of capital is less of a concern in SIDS as RE projects are heavily driven by public concessional finance and the private sector involvement is meager 12

13 Key elements to scale up RE investment in SIDS Capacity building for local professionals and financial institutions Project development and facilitation Financing models and instruments for small-scale RE systems 13

14 Project development and fa cilita tion Project Navigator The objective of the Navigator is to increase the bankability of projects by: Strengthening the project development base Enhancing the quality of project proposals Reducing costs and mitigating risks through proper planning and efficient use of funds Facilitation Platform The objective of the platform is to support initiation, development and financing of renewable energy projects by: Improving the transparency of the market Supporting projects at the early stage Offering IRENA s tools and databases for market players 14

15 Thank you