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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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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


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


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

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

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


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
  • 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)
  • 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

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 - -