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Source: Phaesun. 'The Regional Dimension – Financing Energy Projects in Rural Areas' 8:00-12:00 - 27 June 2013 – The House of the Dutch Provinces. Carlos Miró, Policy Officer. 1. The off-grid market: a land of opportunities.

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Presentation Transcript
slide1

Source: Phaesun

'The Regional Dimension –

Financing Energy Projects in Rural Areas'

8:00-12:00 - 27 June 2013 – The House of the Dutch Provinces

Carlos Miró, PolicyOfficer

slide2

1. The off-grid market: a land of opportunities

"We are proud to be a member of the Alliance, which brings together energy professionals since 2006 to address a fundamentally important global issue, especially in this year of

‘Sustainable Energy for All’. There is a great deal of talk about rural electrification, but ARE is doing something about it.”

Ernesto Macías, CEO, WonderEnergy, President of ARE

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2. Leveraging impact throughsynergies

ARE Background

  • We are the international business association in the world representingoff-gridrenewableenergies technologies for rural electrification.
  • It isour objective to better position the private sector and to enable business development in developing countries and emerging markets
  • We serve as a global platform for sharing knowledge and best practices to enhanceenergyaccess(e.g. hydro, solar, wind)and services (e.g. light).
  • Weenjoy more than70 membersfromindustry, academia and public sector.
  • We promote members’ interests by three service lines:
    • Business & Intelligence Support
    • Public Affairs Support
    • Administration Support
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3. Benefittingfromaccess

to sector intelligenceworldwide

4 rural power markets in developing countries
4. Rural power markets in developing countries
  • Big niche: ~1.1 bn people
  • Demand
  • Remote
  • Geographically scattered
  • Low and irregular income
  • Low demand needs
  • Supply:
  • Low local content
  • Lack of feasibility info
  • Finance related challenges:
  • Poor access to financing
  • No risk mitigation schemes
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1. Individual

2. Mini- grids

5. Off-gridRETsessentialtotackleenergypoverty

  • Grid extension: Often unviable
  • Off-grid diesel:
    • Higher LCOEs due to high OPEX
    • Important for backup
  • Off grid RETs:
    • Cheapest over the system’s lifetime
    • Technologies ready to be deployed
    • Bus. and fin. models ready
    • Applications of off-grid RETs:
      • 1: basic service x isol. households
      • 2: ~grid-tied service x isol. comms

Additional 952 TWhneededtoachieve universal electricityaccessby 2030

Source: UNF, EAPN, June 2012

Source: TramaTecnoAmbiental

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6. Triggerstoenhancebusiness

Thebetterway forward towardsupscaling & replication

  • Leveraging impacts by blending resources and reducing transaction costs through upscaling
    • Need for riskmitigationmechanisms and creditlines
  • Coherent approach of public & private sector interests from the start
    • Need for smart regulatoryframework
  • Applying proven best practices and available business cases
    • Need for training and awarenesscreationschemes
  • Making use of existing business opportunities to enhance further business options
    • Need for more donor-driven market intelligence
7 financial business models
7. Financial & Business models
  • Tariff model (cost-reflective)
  • Economically viable
  • Financially viable
  • Subsidy (Ensuretariffaffordability)
  • One-off subsidies (CAPEX)
  • Transitional or Ongoing subsidies (OPEX)
  • Public support to financing:
  • Risk mitigation
  • Public finance (credit lines at lower rates)
  • Support to commercial banks

Source: UniversitatPolitècnica de Catalunya, October 2012

8 eu funding instruments
8. EU Funding instruments
  • Energy access very high on the EU agenda, mainly due to UN SE4ALL
  • European Commission, Agenda For Change
  • European Parliament, Resolution on Energy Access (strong focus on off-grid RETs)
  • EUMS also very involved: Germany, France, Austria, UK
  • Two main EU funding instruments managed by DG DEVCO
  • ACP-EU Energy Facility
  • DCI ENRTP
  • Challenges:
  • Need for more NSS consultation
  • Focus remains on large scale (e.g. Africa-EU ITF, GEEREF, EU Del. funds)
  • Need for more involvement from the EU public finance sector (EIB)
conclusions
Conclusions
  • Big potential for off-grid RETs in rural areas of developing countries
  • However, in many countries, rural power markets are inexistent
  • Technologies, financial and business models ready to be upscaled
  • Principle for project success: special tariff scheme (normally subsidised)
  • Thus, public sector is crucial (tariff + subsidy + ease access to finance)
  • International (EU) donors key at providing funds for the mentioned programmes
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Thank you for your attention!!!

Photo (appropriate to topic)

Feel free to visit us at our ARE new office in the Renewable Energy House as of 1st July 2013

Source: Phaesun

Alliance for Rural Electrification

Rue d’Arlon 63-67 - Renewable Energy House – 1040, Brussels, Belgium

0032 2 400 10 53 - are@ruralelec.org - www.ruralelec.org