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PROMOTING RENEWABLE
ENERGY THROUGH THE
PRIVATE SECTOR
PATRICK WILLEMS
IFC EUROPE AND CENTRAL ASIA DEPARTMENT
RUSSIA RENEWABLE ENERGY PROGRAM
01 October 2015
Conciliation
and
arbitration of
investment
disputes
Guarantees
of foreign
direct
investment’s
non-
commercial
risks
Interest-free
loans and
grants to
governments
of poorest
countries
Loans to
middle-
income and
credit-worthy
low-income
country
governments
Solutions
in
private
sector
development
IBRD
International
Bank for
Reconstruction
and
Development
IDA
International
Development
Association
IFC
International
Finance
Corporation
MIGA
Multilateral
Investment and
Guarantee
Agency
ICSID
International
Centre for
Settlement of
Investment
Disputes
IFC: A MEMBER OF THE WORLD BANK GROUP
1
Innovation
Finance
Cost efficiency
Execution capacity
80%financing expected from the
private sector (UNFCCC)
THE PRIVATE SECTOR’S ROLE IN CLIMATE MARKETS
2
Improving the Enabling Environment
Case Study: Albania Hydro
Demo Investments
Case Study: CSP in South Africa
Setting New Standards
Case Study: EDGE Green Building
Program
Charting New Territory
Case Study: Modern Karton
IFC’S APPROACH TO MOVING CLIMATE MARKETS
3
Mexico – Aura
Solar:
1st large-scale
merchant solar plant
in country
Chile - SunEdison:
Largest solar plant in
Latin America
Colombia- Recaudo:
Mobile payment
system for smart
transport
South Africa-
EDGE Program:
Green building
certifications and
access to finance
Cote d’Ivoire –Azito:
Efficiency for gas
plant to produce 50%
more energy
Turkey- Modern Karton:
Adaptation in water
stressed area
Romania-Timisoara:
District heating and
mass transit for city
Albania- Hydro:
Advisory program on
regulations and
access to finance
Lebanon-Fransabank:
RE/EE Financing
India- Gujarat Solar:
PPP for solar rooftops
Nepal- Hydro:
Market transformation
program
Bangladesh- Textiles:
Water efficiency
Philippines- Finance:
UNFCCC award-winning
program
China- CHUEE:
Risk-sharing with
banks for RE/EE
financing
OTHER PROJECTS OF NOTE WORLDWIDE:
4
IFC InfraVentures
IFC InfraVentures is a global infrastructure project development fund
$100 million fund with five-year fund life
Mandate to invest in infrastructure projects in IDA borrowing countries*
For each project, IFC InfraVentures can fund up to US$ 4 million of project development expenses at an early stage. Typically, this would be 20-30% of the early-stage financing required to bring the project to financial close.
• In selected situations, IFC InfraVentures may take a larger stake or even lead project development as a “surrogate” sponsor
In return, IFC InfraVentures will take a stake in the equity of the project at financial close
• This is not grant funding
• Additional debt and equity to fund construction could come from other parts of IFC’s balance sheet (would be subject of a separate agreement)
Fund staff work proactively as co-developers of the project, alongside the lead sponsor. Dedicated, experienced senior professionals are deployed
Objectives, structure and working:
* For a list of IDA borrowing countries, see http://www.worldbank.org/ida/borrowing-countries.html
5
Project eligibility criteria:
CLEAN TECHNOLOGY FUND (CTF)
The $5.3 billion Clean Technology Fund (CTF), a funding window of the Climate Investment Funds.
Established in 2008 to provide scaled-up financing to middle income countries to contribute to the demonstration, deployment and transfer of low carbon technologies with a significant potential for long-term greenhouse gas emissions savings.
CTF concessional financing, channeled through five partner multilateral development banks (MDB), focuses on large-scale, country-led projects in renewable energy, energy efficiency, and transport.
• AfDB, ADB, EBRD, IDB, WBG
• $6.1 billion is allocated under the CTF for 134 projects and programs, expecting co-financing of $51 billion from other sources.
• CTF allocations are projected to result in approximately 1.7 billion tons of CO2 emission reductions over their lifecycle—like taking 350 million cars off the road.
• CTF $3.3 billion (54% of CTF allocations) is approved and under implementation for 59 projects, expecting $31 billion in co-financing. Projects aim to deliver 15 GW of renewable energy capacity of which 2 GW is already installed.
6
7
Ongoing activities in Europe and Central Asia
Standard service offerings
Renewable Energy in Russia, Western Balkans, Central Asia,
Caucasus, Turkey, Morocco, Pakistan, Ukraine
Resource Efficiency in 26 countries of EMENA region
Sustainable Energy Finance with banks in Russia, Ukraine, Morocco,
Jordan, Armenia, Albania, Lebanon, Azerbaijan, Turkey, Belarus
Government: Regulatory reform advice
Power sector companies (utilities, transmission and distribution
operators, generating companies, private project developers, IPPs):
feasibility support, targeted assistance
Energy use/ IndustryT&DGenerationPipelinedev.Regulation
Industry: resource efficiency and captive power
scoping and in-depth assessments
IFC: NOT ONLY INVESTMENT BUT ALSO ADVISORY SERVICES
7
RENEWABLE ENERGY IN RUSSIA
Russia is endowed with more than just fossil fuels and minerals:
• Significant renewable resources, many of them untapped.
• Renewable energy market is far from fully developed.
• Russia has been dubbed the “Green Giant” due to its renewable energy
potential.8
Development
Environmental
To reduce GHG emissions on a continuous basis by overcoming barriers
to the development of renewable energy in the Russian Federation
To facilitate a sustainable market for renewable energy in the Russian
Federation by supporting the development of enabling policies,
institutional capacity, market facilitation and financing mechanisms
Infrastructure
205 MW of installed capacity of new, renewable power generation
RUSSIA RENEWABLE ENERGY PROGRAM (RREP) GOALS:
9
Services:
• Energy market research and regulation analysis;
• Technical support / identification of optimal technical solutions and project design;
• Financial and mathematical modeling of project performance for presentation to
investors;
• Analysis and verification of feasibility studies and technical documentation of
investment projects;
• Third party opinions on expected performance of investment projects for
investors/financial institutions;
• Legal and transaction support.
• provides on-going support to governmental bodies (on federal and regional levels)
• provides on-going technical and economic advice to investors and project
developers
• facilitates consensus building among industry players (different RE technologies)
RREP ADVISORY SERVICES
10
Current clients with projects in Russia:
• Private hydro generation company developing projects for retail and wholesale
electricity markets (several regions);
• Private investment company developing 200MW wind generation project;
• Private company developing wind generation projects in isolated/off-grid areas;
• Russian Investment Fund considering financing for wind generation project;
• State generation company considering investment into renewable energy project;
• Pre-feasibility studies for private clients in the mining sector for hybrid systems.
RREP TRACK RECORD WITH THE PRIVATE SECTOR
11
1. Kaluga 2. Nizhny Novgorod 3. Belgorod
4. Tomsk 5. Far East
12
WORKING LOCALLY IN PILOT REGIONS
Case Study
200 MW wind park in northwest Russia
Support to client
Market intelligence
Analysis of renewable energy support
legislation
Financial modeling
Support with 3rd party investors
WORK IN PRIVATE SECTOR: PROJECT DEVELOPERS
13
Decree No. 449 on the Mechanism for the Promotion of Renewable Energy
on the Wholesale Electricity and Capacity Market
Adopted: 28th May 2013
Supported Technologies: Wind, Solar, Small Hydro
Support mechanism: Capacity payments (not FIT)
Complex support scheme specifically tailored to Russian electricity market
• RREP developed advanced financial model based on the legislation
• Specialized training for banks and other financial institutions
• Gathered key industry players for regular “business breakfasts” to foster
dialogue
SUPPORT LEGISLATION FOR RENEWABLE ENERGY IN RUSSIA
14
SUPPORT WITH LOCAL CONTENT REQUIREMENTS
0%
10%
20%
30%
40%
50%
60%
70%
Local content requirement for wind projects under current Russian legislation • Worked with government and
industry organizations to
formulate and express
concerns on local content
requirements
• Levels were adjusted to match
market conditions
• Advisory support to
international OEMs looking at
production in Russia
• Supply chain studies for local
companies interested in
equipment manufacturing
15
Many isolated regions of Russia rely on
expensive and polluting diesel
generation.
Hybrid renewable energy systems can
help bring affordable and reliable power
to local populations.
Alaska has been at the forefront of
developing these technologies and
know-how.
IFC has helped connect local
governments and private companies in
isolated regions with experts from
Renewable Energy Alaska Project.
St. Paul Island, Alaska
TECHNOLOGY TRANSFER: ISOLATED REGIONS
16
IFC AND CTCN: AREAS FOR COOPERATION
Capacity Building and Technical Assistance
• Joint trainings for private sector and/or government agencies
• Best practices for RE incentive schemes
• Development of market infrastructure
Connections and Market Intelligence
• Data sharing and market trends
• Connecting interested parties with respective organizations
• Promotion of both organizations to reach common goals
17
Foster Technology Transfer
• Identify local markets’ technological needs
• Financing of clean energy projects based on latest technologies