LDC Renewable Energy and Energy Efficiency Initiatives (LDC REEEI) A case from Nepal Mr. Ram Prasad Dhital Executive Director Alternative Energy Promotion Center/Ministry of Population and Environment, Nepal
Presentation Outline Status of Energy Access in LDCs Global Initiatives and Actions Undertaken to improve access Need & Impact of Energy Finance for LDCs Barriers and Challenges Case: Impact of AEPC on Nepal Way Forward
Energy Poverty in the World 1.2 Billion Population is Without Electricity Access (WEO 2016) 2.7 Billion People rely on Inefficient Cooking (WEO 2016) 730 Million People live on less than $ 1.90 a day (World Bank 2015) 663 Million People live without safe drinking Water (WHO 2016)
Access in Least Developed Countries United Nations designates 48 Countries as Least Developed Countries (LDCs) Between 1971 and 2013, Per Capita Energy Use in LDCs increased by only 12.5 %, compared with 169 % across ODCs (WB 2016)
More Than Half of 1.2 Million Population Without Electricity Access Live in LDCs 4 out of 5 Lack Access to Electricity 9 out of 10 Lack Access to Modern Cooking Ranked 35 LDC Countries in the bottom 40 based on Energy Access, Energy Efficiency & Renewable Energy Identified 16 LDC Countries out of 20 as High Impact Countries
Access By Region Electricity Cooking
INITIATIVES & ACTIONS
Global Initiatives
Special Initiative for LDCs Only initiative catering specifically to the needs of the world s poorest countries Two Limbs --Strengthen capacity of LDCs to tap into existing initiatives, including AREI-- --Provide support to those who fall within cracks in current frameworks-- -- Increase Share of RE in National Production & Consumption -- Increase RE Producers in National Grid & Mini Grids -- Engage RE Enterprises Increase Level & Specificity of RE Components in Nationally Determined Contributions --
Priority Action Areas Stocktaking existing activities and experiences Strengthening national policies and regulatory frameworks Access to financial resource and investment for renewable energy and energy efficiency Transfer of technologies and technology assessment Capacity building Multi-stakeholder engagement and participation Outreach and communications Monitoring, assessment and continuous improvement
Key Periods and Governing Arrangements Launch: COP 22 one of the key, concrete outcomes of the Marrakech climate conference Period 1: 2017-2020 initial mapping of opportunities, strengthening of regulatory and incentive frameworks; implementation of initial project/programme pipeline Period 2: 2020-2030 full implementation of the initiative, rapidly scaling up renewable energy to be substantial fraction of energy capacity in LDCs Steering committee Technical working group Secretariat and implementation unit Trustee
BARRIERS
Estimate of Total Investment Needs to reach Universal Access by 2030
USD 14.1 Bn approved for International Public Climate Finance USD 5.6 Bn allocated for Energy Projects and Programs USD 0.3 Bn allocated for Low Income Countries IIED, 2016
CHALLENGE IN FINANCING LDCs receive less than USD 300 Mn in Energy Finance Almost half of this, USD 118 Mn focused on decentralized energy solutions including mini-grids and off-grid energy Nearly, 90 % of the total grid-tied energy investment in low income countries are spent across three countries: Ethiopia, Tajikistan and Kenya Even, middle income group countries such as India and Ukraine received finance for decentralized energy Middle income countries are less in need of grant based public finance as they can potentially raise significant capital from private sources of finance
BARRIERS Economic High Cost of Capital, Limited Market Size, Limited Access to Finance Socio-Cultural, Political & Institutional Political Instability, Regulatory Uncertainty, Currency Risk Investor Returns Longer Returns, Limited Commercial Finance Climate Funds Preference for Loans, Large Sized Projects
IMPACT OF ENERGY FINANACE ON LDC: CASE NEPAL
Alternative Energy Promotion Centre Central Agency for RE Promotion Member Secretary for Access component (SEforAll) Country Action Agenda Investor Prospectus Recommended for GCF accreditation New initiatives for PPP - Reverse auctioning, Best Available Technology (BAT), Incentive to Energy Services etc. Benefitting More than 3.6 Million Households From Over 35 MW RETs In the last 20 Years of AEPC, Renewable Energy Mix Growth increased from 0.15% in 1996 to 2.67% in 2016 1500 % 8 CDM Projects registered in UNFCCC USD 1.2 Million CERs Generated USD 6.7 Million Revenue Generated till date
Creating Enablers for Financing Energy Access in Rural Nepal Support in Policy Formulation, Planning and facilitating Implementations with Innovative Approaches SPV, ESCO CREF to steer funding for Decentralized RE via Commercial banks and Micro-finance Technical Intermediary between Governments/Donors and Financial Intermediaries Banks, MFIs, NGOs, DDCs, Technology Providers Channelize Finance for RE Investment to Households and Communities
GLOBAL OPPORTUNITIES FOR ENABLING ENERGY ACCESS
OPTIONS TO CONSIDER Enact Supportive Policies Tax incentives to support deployment of RETs Reformation of Subsidies for Sustainable Development Loan Guarantees for Small & Medium RE Developers and Service Providers Effective Government Oversight and Regulations Building Capacity Training & Learning Exchanges for Regulators, Policy Makers & Energy Planners Business Development Assistance for Private Sectors Promote Investment Design Ease-to-Understand and Ease-to-Access Climate Finances Flexible and Fit-for-purpose instuments Support LDCs in Developing Applicable Market Instruments Identify 15 LDCs as part of the 20 fast-moving countries
Energy Finance for Sustainable Impact Energy User Local Savings Group Government Subsidy Loan Retailer Finance Scheme Energy Provider Concessional Loans Market-rate Loans Equity Result Based Financing/ Business Model Innovation Financial Institutions Grants Concessional Loans Credit Guarantees National Government Grants & Loans from Development Finance Institutions Domestic Taxes
ENSURING NO ONE IS LEFT BEHIND
There is A Larger, Quicker and Critical Role to Play Based on World Energy Outlook 2016, an estimated 1.2 Billion Population is Without Electricity Access And 2.7 Billion People rely on Inefficient Cooking
THANK YOU For further communication: Ram Prasad Dhital Executive Director Alternative Energy Promotion Centre Khumaltar, Lalitpur P.O. Box 14364, Kathmandu, Nepal Tel. No.: +977-1-5539390, 5539237 Extn. 235 E-mail: ram.dhital@aepc.gov.np www.aepc.gov.np
Q&A Easy to process application for the receipt country based on the commitments under the Paris Declaration to Implement, where feasible, common arrangements at country level for planning funding, disbursement, monitoring, evaluation and reporting to government on donor activities and aid flows (OECD, 2008: para. 32) Engage private businesses and investors Developing innovative relationships with financial institutions active in renewable energy