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The Role of SGBs in Clean Energy Development
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  1. The Role of SGBs in Clean Energy Development Jeffrey Haeni USAID/EGAT/I&E Infrastructure Workshop

  2. Alternative Scenario or BAU? $26 trillion in global energy spending by 2030 and there will still be… • 1.4B w/out electricity • 2.6B using traditional cooking fuels Source: UN Population Projections, 2006 ; IEA World Energy Outlook, 2008

  3. The SME Concept

  4. Toyola-Stoves-Ghana VEV-Wind-Senegal Lambark-LPG-Ghana LEDCO-Hydro-Nepal SME-RE-Biomass-Cambodia Two Decades of Successful Enterprise Experience … 100s of Examples SEUL-Solar-Uganda Red Ceramics- Natural Gas-Bolivia MOP-Fruit Drying-Uganda Source: E+Co

  5. The Clean Energy SGB Universe Definition: <300 employees, <15 million in revenues/assets (IFC) Types of Services: Lighting, electricity for appliances, improved cooking, water-pumping, agro-processing, motive transport Technologies: LPG, Solar PV, solar thermal, improved biomass cookstoves, hydro, wind, biogas, gasification, biofuels Interaction with Customers: Single buyer PPAs, inside-the-fence deals, large numbers of retail customers

  6. The SGB Universe • Business models: • How will the customer pay? Cash, 30-day credit, long term credit • rental, fee-for-service/utility model, supplementary subsidies • provided directly to business, vouchers systems, … • Niche in the value chain? Sourcing, manufacture, distribution, • retail, maintenance, project operator… • Operational structure? One company w/ everything in house, • one company employing contractors, franchise model, … • Ownership? Private (single owner, limited partnership, • corporation, association), public-private partnerships, • community/cooperatively owned, etc, …

  7. SME Universe Current Status: Source: REN21 - 2005 What Can be Achieved? Source: Innovations in Rural Energy Delivery – Navigant - 2006

  8. Source: Innovations in Rural Energy Delivery – Navigant - 2006

  9. SME Development Toolkit: Methodology • Assemble a cross-section of real-world examples • There are 16 of these, and counting • From examples, identify criteria linked with success and failure, replicability and growth • 1 programmatic & 1 enterprise framework developed • Develop a set of implementation tools for USAID staff to evaluate and improve existing programs and propose new ones. • “Tools” include: the 2 frameworks, financial analysis tutorials, portfolio spreadsheets and the effects of carbon finance, concrete step-by-step materials on how to plan a business and create proposals

  10. The Framework for ProgramImplementation There are 3 main elements that, in combination, can characterize most support programs. The most effective programs address all 3 in a balanced fashion. Policy Technology Enterprise

  11. Program Challenges Some programs, for example, put relatively too much emphasis on policy and neglect the technology and enterprise aspects. The potential positive impacts, then, “spill” out and are not realized. Technology Policy Enterprise

  12. Policy & Enabling Environment Entrepreneur (e)‏ Demand (d)‏ Technology (t)‏ Knowledge (k)‏ E (Enterprise)‏ C (Customer)‏ Services (Es)‏ Services (Cs)‏ Finance (Ef)‏ Finance (Cf)‏ Financial Social Environmental The Framework for SGBs:Creation and sustained success

  13. Cross-cutting Topics • Policy and enabling environments • Carbon finance • Subsidies • Avenues of intervention

  14. Policy and enabling environments • Key issue areas affecting energy SMEs (can be positive or negative, depending) • Government/donor energy support programs • Preferential/discriminatory tax treatment • Business and banking environment

  15. Carbon Finance • Represents a potential additional source of revenue for energy SMEs • Must balance carbon development costs against anticipated revenues • CERs - difficult, narrow range of profitability • VERs – ~ 10,000 t/yr by 2010 “hurdle rate” • Single enterprises or programs of activities • Need for specialized carbon developer

  16. Subsidies • What makes a subsidy “smart?” • Effective, achieves its stated aims • Satisfies the “But-for” principle • Cost-benefit analysis • Efficient, compared to alternative strategies • Hard subsidies (provide forms of direct financial benefits) vs Market readiness subsidies (build human capacity, awareness, etc.)

  17. Avenues of Intervention • Variety of ways to get involved • Information • (collection, analysis, dissemination) • Market readiness • (training, advocacy, awareness-raising) • Transactions • (program implementation, finance)

  18. The Wikispace • Rationale for creating a Wikispace • Dynamic, easily updated, supports multiple media formats, more “2D” (as opposed to a “linear” report) • Can be opened up for future collaboration, leveraging collective intelligence and expertise

  19. The Wikispace