3-4 september 2012, Tunisia

Ass. Prof. Amel BelanèsHigh Institute of Management of Tunis

– Tunisiaamel_bns@yahoo.fr

Socio-economic development in the era of renewable energies:

Towards the creation of a research institution for the MENA region based on the DESERTEC concept

1. Conventional methods of projects financing

2. What attracts capital to finance renewable energy?

3. What are the renewable energy finance handicaps?

4. Supporting bodies of renewable energy

5.How do financial institutions contribute?

6. What are the factors determining the appropriate financing mechanism?

7. How can we innovate in financing sources and mechanisms?

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Project financing

Corporate finance

Lease financing

Subsidies

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Project financing Limited recourse financing to the cash flows of

the project Corporate finance

Retained earnings otherwise paid to stockholders Equity financing Stock issuance Short-term borrowing from financial institutions Sale of long-term bonds

Lease financing

Subsidies

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Regulatory compliance

Direct business profits

Indirect business benefits

Not-business related benefits

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Regulatory compliance Taxes, fines, polluter-pays principle,

Subsidies

Direct business profits Business opportunities Secure, sustain or reduce costs of key natural

resource inputs required for business operations

Securing license to operate and avoiding losses from protests

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Indirect business benefits “Green” branding, marketing Improved staff pride and morale and enhanced

recruitment Reflect broader business values of the

corporation

Not-business related benefits Philanthropy / Charity

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Several barriers before penetrating the market Lack of technical capacity Lack of supportive policy frameworks Inadequate financing for installations or supporting

businesses Lack of awareness and trust in the

technologies by users and utility companies

Benefits accrue on the long run

Appropriate regulatory framework

Provision of the infrastructure to make the local economy viable

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Global Environmental Facility (GEF) The United Nations Development

Programme (UNDP) The United Nations Environment

Programme (UNEP) The world Bank Regional development banks Executing Agencies under the policy

of expanded opportunities

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Global Environmental Facility (GEF)

Independent financial organization, established in 1991 Grants to developing countries for projects that

benefit the global environment and promote sustainable livelihoods

Removed barriers to developing markets for renewable energies wherever cost-effective

Enabling policy frameworks, capacity for understanding and using the technologies

Financial mechanisms to make renewables more affordable GEF’s three implementing agencies : UNDP, UNEP and the

world Bank

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The United Nations Development Programme (UNDP)

UN global development network, funded entirely by voluntary contributions from member nations in 1966

Solutions to develop local capacity and meet global and national development challenges

Change and exchange of knowledge, experience and resources to help people build a better life

Expert advice, training, and grant support to developing countries, with increasing emphasis on assistance to the least developed countries

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The United Nations Environment Programme (UNEP)

Programme rather than an agency of the UN found in 1972

Developing international environmental conventions, promoting environmental science and information and illustrating the way to be implemented

Funding and implementing environment related development projects

Assisting developing countries in implementing environmentally sound policies and practices

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The world Bank

UN agency created in 1944 and focus on economic growth

Since the 1992 Rio Declaration, activities promoting the environment and human rights

“Safeguard” policies: the minimum environmental and social requirements expected of borrowers, developed in the 1980s and gradually updated

2006, Sustainable Development Network 2010, a progressive “access to information”

policy

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Regional development banks

The Asian Development Bank, Inter-American Development Bank, European Bank for Reconstruction and Development, and African Development Bank

Development Business Programme

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Invest directly in projects Provide direct budget support to

government for policy reforms By injecting money directly into the government

treasury, full discretion on how to use this money Leverage further investments

By managing climate change trust funds that attract other investors

Share knowledge By providing expert advice to governments and

companies on sustainable development best practices

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National level context

Site-specific context

Economics practices

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National level context Institutional & Governance (vision +

capacity)

Stable political and economic environment

Regulatory framework in place

Environmental awareness

Understanding of social and economic impact of unsustainable land management

Site-specific context Economics practices

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National level context Site-specific context

Ecosystem type and use and current use of the land

Capacity to enhance environmental services

Local capacities (social capital, infrastructure, space for discussion)

Land tenure situation

Economics practices

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National level context Site-specific context Economics practices

Demand and supply

Cost and cost-effectiveness

Required time for development and implementation

Amount of resources generated

Synergies with other thematic priorities

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Why innovative financing?

What is innovative financing?

Innovative financing models for renewable energy

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Aim to : Increase resources availability

Diversify the resource base

Complement traditional funding

Maximize the projects financial profitability

Can provide direct incentives to engage in renewable energy projects

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Innovative sources and mechanisms of funding are non-traditional modes of financing

Innovative funding includes resources from internal, external, private or public sources

Innovative funding can be mobilized through financial mechanisms and instruments

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Clean Development Mechanism Dealer-Credit Model Consumer Credit Model Supplier Credit Model Energy Service Company Model Revolving Fund Green Venture Capital Fund

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Developed countries (Annexes-1 ones)

reduce emission in a flexible and cost-effective manner

obtain Certificates of Emissions Reductions

Developing countries (non-Annex I called the “host countries”)

meet sustainable development objectives

benefit in the form of investment, access to better technology, and local sustainable development

Energy Service Company

Provides Energy Customers

Pay Fee to the energy service

company

Commercial Financers

Government or Multilateral Sources

Ownership and maintenance of the equipment lies with the energy service company

Customers pay for the energy service that is provided by an energy service company (ESCO)

Energy becomes more affordable

Less long-term risks

Investment model: “socially responsible investing” or “the triple bottom line”

Investments from GVCFs can be in :

Loans: for small and medium enterprises which contribute to sustainable development

Equity financing: to “green” entrepreneurs

Links with supporting bodies

Environmental

Social Financial

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Thank you for your attention