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Expanding access to electricity: the role of large companies Paul Loeffelman

Expanding access to electricity: the role of large companies Paul Loeffelman American Electric Power Managing Director – Corporate External Affairs, Head of International Cooperation Affairs Washington D.C. 21 st February 2012. Strategic & commercial drivers.

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Expanding access to electricity: the role of large companies Paul Loeffelman

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  1. Expanding access to electricity: the role of large companies Paul Loeffelman American Electric Power Managing Director – Corporate External Affairs, Head of International Cooperation Affairs Washington D.C. 21st February 2012

  2. Strategic & commercial drivers • Key feature of many emerging & low income country energy markets. • ‘Base-of-the-pyramid’ (BoP) market for energy services - USD +500 billion per year. • Provision of infrastructure & management services. • Competitive advantage for utility service providers. • Deployment & commercialization of new technologies.

  3. Centralized electricity provision: company cases • Eskom. Improving the electrification rate in South Africa by 36 to 83%, targeting universal coverage by 2020. • GDF Suez. Improvingaccess to electricity and other utility services for 500 000 people in Casablanca. • Eni. Reducing gas flaring and providing electricity for 700 000 people in the Congo. • Chevron. Clean and reliable hydropower from geothermal power in Indonesia for 4 million households.

  4. Extending the grid • Key business model innovations: • Cost reductions through technical innovation. • Connection costs paid in installments. • Helping customers improve their efficiency of energy usage. • Pre-pay technology to reduce losses and increase convenience. • Working through community associations. • Complementary businesses (e.g. sale of appliances). • Challenges: • Cost of servicing many rural communities. • Affordability for poorest consumers.

  5. New models for decentralized energy services: company cases • ABB. Access to Electricity Program. • Schneider Electric. Distributed solutions for remote communities in Vietnam. • Osram. Off-Grid Lighting – Energy Hubs.

  6. Distributed/renewable systems • Key business model innovations: • Establishing/working through local enterprises as the service providers. • Locally-appropriate technologies. • Servicing household and productive uses. • Financial model - balancing affordability and operational sustainability. • Challenges: • Mobilizing capital costs. • Sufficient local capacity to manage, operate and maintain systems. • Cost v’s reliability trade-offs.

  7. Scaling up business investment • Business investment can be scaled up by: • Removing investment barriers • Enhancing return on investments • Lowering the risks on investments • Addressing risks is critical: • Risk drives the cost of capital and hence the return on investment • Risks: political, policy, technical, currency, carbon prices etc. • Key tools: Power Purchase Agreements (PPAs), strong/enforceable contracts, insurances, investment guarantee facilities etc. • Fundamental importance of well-designed and stable policy and regulatory environment • Public-Private Partnerships will be a key delivery model • Strengthening PPPs to Accelerate Global Electricity Technology Deployment (UN-Energy & GSEP)

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