KfW Entwicklungsbank

1. Powering Cities & Green Solutions - Africa Urban Infrastructure Summit KfW Entwicklungsbank

2. 1 3 4 5 KfW: Who we are and what we do Funding Municipal Infrastructure – KfW’s success story in Germany KfW Engagement in South Africa – Green Energy Efficiency Fund KfW Engagement in South Africa – Climate Friendly Mobility Content 2 How to promote energy efficieny in buildings Energy: Powering Cities & Green Solutions

3. KfW Entwicklungsbank –Who we are and what we do

4. We Are Part of KfW Bankengruppe Domestic promotion International business We promote Germany We ensure internationalisation We promote development Promotion SMEs, business founders, start-ups Promotion construction of new housing and modernisation as well as education Financing municipal infrastructure projects and global loans Germany/Europe agency business for Federal Government International project and export finance Promotion of developing and transition countries Business Area Mittelstandsbank Business Area Privatkundenbank Business Area Kommunalbank Business AreaExport and Project Finance Business Area Promotion of Developing and Transition Countries Promotion of environmental and climate protection Energy: Powering Cities & Green Solutions

5. How to promote energy efficiency in buildings Energy: Powering Cities & Green Solutions

6. The cutting edge:Efficieny House Plus (e-mobility) Energy: Powering Cities & Green Solutions KfW R. Hennes 10/2011

7. How to Promote Energy Efficiency? Tambourine Carrot Stick Energy: Powering Cities & Green Solutions 7

8. Regulatory Framework Forms the Foundation for Other Instruments „Promotional Programmes“ „Information and Consulting“ I N S T R U M E N T I N S T R U M E N T Legislation, Rules and Regulations, Technical Standards • Energy efficiency requirements • for production, services, new and existing buildings Energy: Powering Cities & Green Solutions 8

9. Development of Energy Efficiency in Buildings Development of regulatory minimum requirements of energy efficiencyof new constructed houses compared to best practice an research E n e r g i e e f f i z i e n z Primary Energy Demand 1.WSVO Regulatory minimum requirements Best practice research 2.WSVO Solar- houses 3.WSVO EnEV2002 EnEV2009 Low-energy- houses 3-liter- houses Zero-energy- houses Plus-energy- houses Energy: Powering Cities & Green Solutions 9

10. KfW‘s Business Model Funding by KfW and on-lending through retail banks Capital market State liability Institution owned by Federal Republic and federal states Funding AAA Rating Loan to customer Refinancing loan retail bank Customer Interest rate Interest rate Interest subsidy Margin for credit risk and handling • Advantages: • No distortion of competition • Concentration on core competences • Diversification of risks German Government or KfW Promotional mandate defined by KfW Law Energy: Powering Cities & Green Solutions 10

11. Lessons Learnt Comprehensive system of incentives in Germany • Regulation is baseline • Harmonizing of regulation and promotion • Information is crucial to raise awareness KfW’s eligibility criteria are custom-made for residential buildings • All groups of investors can apply • Incentives for different investor groups provided Focus on interest subsidised loans • provides capital and incentives • Effective leverage on government funds KfW-Efficiency House as brand for energy efficiency • creates visibility and transparency On-lending principle promotes scale up • broad distributional network through retail banks • local risk assessment Energy: Powering Cities & Green Solutions

12. Lessons learnt for transfer of experiences „One size fits all“ does not work. Crucial issues are: Ownership - energy price - energy consumption patterns – benefits - saving potential - access to credits/ banking system - system of legislation, technical rules / skills (design, advise, supply, construction, implementation, operation) - awareness/ awareness building – NAMA – and many more Consider multiple benefits: Jobs – taxes - energy and GHG savings - energy autonomy Comfort, health „Only what you can measure, you can manage“ Auditors - Assessment and calculation tools – meters, measuring devices Low hanging fruits versus substantial retrofit Low hanging fruits have higher rates of return, but less impact A Stick is always good to have! Legal, regulatory framework is a must! Energy: Powering Cities & Green Solutions 12

13. Funding municipal public infrastructure KfW‘s success story in Germany

14. Lending for municipalities Kommunen Direct loan No collaterals KfWKommunalbank Loan agreement and disbursement Public enterprises Social welfare NGO Commercial Bank Loan Application at a commercial bank Approved Application Loan agreement and disbursement Refinancing Energy: Powering Cities & Green Solutions

15. Energy-efficient Refurbishment - Municipalities Basic Principles Basic principle: Standards based on energy performance certificate according to Energy Saving Ordinance (EnEV) for new buildings. KfW Efficiency House 100 / KfW Efficieny House 85 Individual measures Basic principle: A technical expert has to confirm the compliance with technical requirements. • Representatives of the competent public construction authorities • Architects, construction engineers and other experts who have a practicing certificate from the respective federal state. Basic principle: The more ambitious the aspired energy consumption level, the higher the KfW loan. • Up to EUR 50 per m² of net floor space (but not more than EUR 300 per m² in total) for each individual measure • For a KfW Efficiency House 100 up to EUR 350 per m² of net floor space • For a KfW Efficiency House 85 up to EUR 600 per m² of net floor space Energy: Powering Cities & Green Solutions

16. KfW Engagement in South Africa - Green Energy Efficiency Fund

17. Green Energy Efficiency Fund (GEEF) • Industrial Development Cooperation (IDC) and German Development Bank KfW established a R500 million facility for energy efficiency and self renewable projects within South Africa • It was launched in 2011 IDC KfW Concessional debt funding Technical assistance grant Develop green industries Capacity building in clean energy finance GreenEnergyEfficiency Fund Reduced interest loan – Prime less 2 % Long payment term (up to 15 years) Adresses market failure and funding barriers Energy: Powering Cities & Green Solutions

18. Purpose: Green Energy Efficiency Fund Energy: Powering Cities & Green Solutions

19. Case Study 1: 25% Reduction in Grid Electricity Consumption by Installing a Solar Photovoltaic (PV) System A Cape Town-based company that produces sport wear and leisurewear under license to an international brand. The company has embarked on a project to install a grid connected (grid-tied) rooftop PV system to generate 25% of the company’s annual electricity requirement “Electricity accounts for more than 90% of our carbon emissions and is a scarce resource that is vital to the successful operation of our business. We are confident that the solar installation will generate between 30 – 40% of our energy requirement, thereby reducing our carbon footprint, save money and improve our sustainability into the future.” William Hughes, MD, Impahla Clothing Energy: Powering Cities & Green Solutions

20. Case Study 2: 18% Energy Savings from Utilisation ofWaste Gas to feed a Combined Heat and Power (CHP) Plant The chemical production company wants to use the waste gas as fuel for a 7.8 MW CHP plant to replace part of the power supply from the grid. This results in 18% savings from using the waste gas to feed the CHP plant. “The company spends close to R7-million on electricity a month, and this new co-generation plant will cut this bill by about 20%. The additional 8 MW capacity will enable the company to operate at full production compared with the 70% capacity because of electricity constraints. „ Claudio Siracusano, GM, SACC Energy: Powering Cities & Green Solutions

21. Case Study 3: More than 40% Savings in Energy Consumption with Solar Water Heaters A financial intermediary that provides Solar Water Heaters (SWH) on a lease-to-own agreement to private households and commercial buildings. Solar water heating systems are one of the most cost-effective uses of solar energy in South Africa as they replace more than 40% of electric heated water. “The Green Energy Efficiency Fund will enable us to roll-out Solar Water Heaters to at least 400 households, by removing the challenge faced by many clients in financing the high upfront costs of SWH.” Quinton Zunga, CEO, Solar Network Energy: Powering Cities & Green Solutions

22. KfW Engagement in South Africa - Climate Friendly Mobility

23. Climate Friendly Mobility Gas for Transport • KfW supports IDC with a 65 m EURO loan to facilitate the rolling out of a gas-generated bus system • Purpose: • Compressed Natural Gas (CNG) fuel increases energy diversification • Improves the environment (GHG reduction) and living conditions • Builds on proven technology • Provides opportunitites for industrialisation and jobs • Challenges: • Limited resources (bio methane and natural gas) available domestically • High costs to set up CNG facilities • Informalised transport sector • Approaches adopted: • Rigorous system approach – thinking outside the box – beyond sector and industry boundaries Energy: Powering Cities & Green Solutions

24. Good Practice Examples – China Compressed Natural Gas (CNG) for Transport • Start: about 2000 • Motivation: environment and fuel diversification • Main drivers: local pollution and GHG reduction • Achievement: rapid build-up of 2.500 refuelling stations ¼ of all CNG vehicle are urban buses • Approach adopted: provinces and cities take the lead for infrastructure implementation • Success stories: rapid market penetration for buses, trucks and inland navigation + growing LNG share • Challenges: very moderate natural gas reserves compared to rapidly growing demand Energy: Powering Cities & Green Solutions

25. Good Practice Examples – Thailand Compressed Natural Gas (CNG) for Transport • Start: 2003 • Motivation: fuel diversification – use of domestic natural gas instead of import of oil • Main drivers: substitution of imported oil and replacement of LPG by CNG due to safety concerns • Achievement: half of Bangkok‘s taxi fleet runs on CNG • Approach adopted: refuelling infrastructure network built up by national oil company – recently via distribution by high pressure composite semi-trailers country wide • Success story: rapid CNG vehicle rollout • Challenges: declining domestic natural gas reserves Energy: Powering Cities & Green Solutions

26. Key Topics for Implementation • Technology • Environmental performance of different fuel/drive/vehicle options • Economics • Cost of fuel supply • Bus cost differentials between diesel and CNG • Total costs of ownership • Policy / Regulatory • Fuel tax plans • Bus concession plans Energy: Powering Cities & Green Solutions

27. Want to know more? • www.kfw-entwicklungsbank.de • www.deginvest.de • Annual Report on Cooperation with Developing Countries: http://www.kfw-entwicklungsbank.de/ebank/DE_Home/I/Download_Center/Jahresberi.jsp • Evaluation report on the effectiveness of cooperation with developing countries:http://www.kfw-entwicklungsbank.de/ebank/DE_Home/I/Download_Center/Evaluierung.jsp • Special publications / Online Library in the Internet:http://www.kfw-entwicklungsbank.de/ebank/DE_Home/I/Download_Center/index.jsp Energy: Powering Cities & Green Solutions

28. Busso von AlvenslebenDirector KfW Office Pretoria busso.alvensleben@kfw.de Thank you for your Attention!