UNLOCKING RENEWABLE ENERGY INVESTMENTS. Central American Energy Conference 24 August 2017 San Salvador, El Salvador

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1 UNLOCKING RENEWABLE ENERGY INVESTMENTS Central American Energy Conference 24 August 2017 San Salvador, El Salvador

2 Renewable energy investment trends Source: IRENA using BNEF data (2017)

3 Renewable energy investment trends and needs for the energy transifon Renewable energy investment needs to be scaled up significantly and rapidly X15 ~X20 X2 X2 Source: IRENA using BNEF data (2017)

4 How to scale up renewable energy investment» Based on surveys and case studies» Iden2fies five ac2on areas and suggests prac2cal recommenda2ons

5 Key challenges in unlocking renewable energy investment Limited access to capital Lack of pipeline of investment-ready projects Limited experience with renewables in the financial sector Limited access to capital at local level High (perceived) risk Poli2cal risk Policy and regulatory risk Counterparty risk (power off-taker risk) Grid interconnec2on and transmission line risk Currency risk Liquidity and refinancing risk Resource risk Technology risk Small deal size high transac2on cost Insufficient investment size and high transac2on costs Financial regula2ons restraining illiquid and riskier investments

6 AcFons to Address Challenges to Scale Up RE Investments Challenge: Lack of pipeline of investment-ready projects q Support project prepara2on through capacity building and dedicated grants Ø IRENA s Project Navigator q Facilitate interac2on between project developers and investors, using plavorms Ø IRENA s Sustainable Energy Marketplace

7 Financing of renewable energy projects Project Navigator To make project development processes clearer and more systemafc, facilitafng the creafon of more bankable projects in SEE. Sustainable Energy Marketplace To support the inifafon, development and financing of renewable energy projects in the region. 7

8 AcFons to Address Challenges to Scale Up RE Investments Challenge: High risk percepfon of RE projects q Streamline procedures and redirect ins2tu2onal incen2ves to enable greater provision of risk mi2ga2on instruments q Develop new risk mi2ga2on instruments, structures, funds or facili2es for power offtaker risk and currency risk in emerging markets

9 Need for risk mifgafon to reach scale Investment growth not fast enough in developing/ emerging economies Need to address high risk percep2on poli2cal, FX, off-taker risk, etc. Risk mi2ga2on can help build investor confidence to keep cost of capital down and accelerate scaleup

10 The role of public finance insftufons in mobilizing capital for RE Scaling up investment can build on the strong business case for renewables Through blended finance, public finance ins2tu2ons can: o Facilitate access to finance at the local level; o Mobilize private capital through risk mi2ga2on o Broaden the investor base to ins2tu2onal investors Need for dedicated mandates and structures focusing on renewable energy 10

11 AcFons to Address Challenges to Scale Up RE Investments Challenge: Investment size and market liquidity q Standardiza2on of project documenta2on, tendering, contrac2ng and due diligence processes Ø Terrawa^ Ini2a2ve q Aggrega2on of smaller projects

12 The role of climate finance to support the transformafon of the energy sector ConnecFng climate finance to RE projects Improving access to finance at a local level TransformaFonal Role of the Green Climate Fund (GCF) Improving quality of funding proposals Strengthening ins2tu2onal capacity to access climate finance Readiness funding from Green Climate Fund (GCF) Providing funds to a^rac2ve projects Suppor2ng na2onal development banks to finance RE projects IRENA as a delivery partner to GCF through RRAs and roadmap analysis to support countries with building a na2onal strategy 12

13 Thank you for your axenfon

14 Success stories Country profiles Project concept Site characteriza2on Deployment Assistance to financial closure and debt facility Project pipelines Corridors, SIDS Lighthouse, Readiness Pre-feasibility Bankable project development guidelines Investor ready Feasibility Evaluate, technical assistance

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