Supporting Small Alternative Energy Enterprises

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Phebe Jennings
8 years ago
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1 Supporting Small Alternative Energy Enterprises

2 Mission contributing to sustainable development by supporting Small and Medium Sized Enterprises (SMEs)

3 Fields of expertise SME s for sustainable development Entrepreneurship Training Diversified Financial Services including microfinance Business Development Services including support in alternative energy project development

Services including microfinance Business Development

4 Triodos Facet in brief Comprehensive consultancy and training services With an open mind For SME development and financial service providers To contribute to sustainable development

5 Presentation Outline Subject: How to set up small projects to reduce CO2 emissions, with microfinance. Presentation contents: 1.What products are we talking about? 2.Small project characteristics, challenges and goals 3.Role of microfinance in rural energy projects 4.Potential role for the chemical industry

6 Product example Solar Panels SOLAR PHOTO VOLTAIC SYSTEMS (PV) Solar systems work wherever there is sunlight. Very well suited to meeting basic electricity needs. The main applications are lighting, powering radio and TV, charging mobile-phones, pumping water, and refrigeration.

Very well suited to meeting basic electricity needs.

7 Product example Windmills WIND ENERGY Where wind is sufficient and reliable, wind energy can be a very costeffective solution for pumping water and generating electricity. Small windmills are available for individual households. Larger ones can be used to power complete villages.

pumping water and generating electricity.

8 Product example Water Turbines PICO HYDRO TURBINES Very cost-effective power source for electrifying houses, schools or community houses in mountainous areas. Already a huge success in China and Vietnam, this product is still relatively new to many other countries.

9 Product example Solar Driers SOLAR DRIERS Solar driers use the heat of the sun to dry agricultural produce such as fruit, spices, vanilla and fish. Solar drying helps food conservation and gives rural people better access to faraway markets.

10 Product example Cooking Stoves BIOMASS FOR COOKING AND HEATING Over half of the world s population depends on biomass (wood or charcoal) for cooking and heating. New stove designs are more energy-efficient, reducing cost and collection-time, and reducing toxic fumes.

11 Product example Biogas Plants BIOGAS FOR COOKING/LIGHTING Biogas is methane produced by the fermentation of organic matter such as manure. In countries like Nepal and Vietnam, small biogas plants are popular for households with five or more pigs or cattle. The gas is mainly used for cooking and lighting purposes.

In countries like Nepal and Vietnam, small biogas plants are popular for

12 Small Energy Project Characteristics Involving alternative (clean) energy solutions i.e. other than oil, kerosine, coal and such fuels High need in rural areas - because these are often not connected to the electricity grid Clients/Users may be individual households, community organisations or small enterprises Project managers may be the company selling the energy product, an NGO or a financial institution

13 Small Project Set-up Challenges Energy projects involve distribution and maintenance of energy equipment you therefore need (a partner with) technological capacity Doing business in rural areas means your clients are far apart, requiring an expensive infrastructure You need scale or subsidies to cover the costs of that expensive infrastructure Therefore rural alternative energy projects are not small by definition. They may need to grow big in order to become cost-effective

an expensive infrastructure You need scale or subsidies to cover the costs of that expensive infrastructure Therefore

14 Small Project Set-up Challenges Projects take long (> 2 years) to set up: Takes time to establish cooperations and service models with partners (like NGO, energy company or microfinance institution) Takes time to do market surveys and to market the product to raise interest amongst population Takes time to test the technology in local setting Takes time for (potential) clients to get familiar with the product

Takes time to do market surveys and to market the product to raise interest amongst population Takes

15 Project Goals Keep in mind that different project stakeholders may have different goals: Local energy company, or clean technology owner may be profit oriented NGO may be development, environment/co2 reduction and/or health oriented Client will want better or more affordable energy Project financier or carbon buyer may be CO2 reduction oriented

be development, environment/co2 reduction and/or health oriented Client will want

16 Role of Microfinance Clean energy system Household energy systems Small business energy systems School, church, community building energy systems Village level based mini-grid energy systems Target market Loan Type Repayment source Individuals Consumption Savings on fuel Loan Entrepreneurial Business Business individuals Loan income/savings Community organisations Community organisations or businesses Consumption Loan Consumption or Business Loan Savings on fuel Savings and / or business income

Consumption Savings on fuel Loan Entrepreneurial Business Business individuals Loan income/savings Community organisations

17 Rural Energy Finance Model 1 Carbon Buyer Buyer (4) Project developer (NGO, energy equipment company, ) / SPV Technology provider (5) (1) (3) Rural Households Small Rural Businesses Villages / Community Organisations (2) Micro Finance Inst & Bank(s) (6) Possible Subsidies

provider (5) (1) (3) Rural Households Small Rural Businesses

18 Rural Energy Finance Model 2 Possible subsidies (2) (2) Bank / Donor Fund (1) (7) (6) Project developer/ ( Clean Energy oriented Microfinance Institution / NGO) (8) (3) Tech Provider (4) (5) Rural Households Small Rural Businesses Villages / Community Organisations Carbon Buyer Carbon Fund

Institution / NGO) (8) (3) Tech Provider (4) (5) Rural Households Small

19 Conclusions on Rural Energy Projects and Microfinance For microfinance institutions lending risks in rural energy projects are harder to manage than ordinary micro lending, as project success is highly dependent on a range of outside factors like: Management capacity of project developer Performance of technology provider Subsidies (& carbon credits) coming through

success is highly dependent on a range of outside factors like: Management capacity of

20 Conclusions on Rural Energy Projects and Microfinance We therefore note the following preconditions for a successful role of microfinance institutions in rural energy projects: -MFI needs strong rural development mission -Project needs a very capable management to effectively manage the project and its partners -Strong demand for and high ease of use and maintenance of the clean energy technology

rural development mission -Project needs a very capable management to effectively manage the

21 Potential role for the chemical industry Your role depends on your goal: CO2 reduction for Kyoto compliance? CO2 reduction independent of Kyoto compliance? Rural development in developing countries?

22 Small projects and Kyoto Compliance Kyoto Protocol is hugely successful Project Identification and Formulation Not well suited to small projects as certification process is long, risky and bureaucratic Perhaps an option if process is simplified after Copenhagen Dec- 09 Project participants Host Country Approval Validation Registration Implementation and Monitoring Verification & Certification Issue CERs National CDM Authority Designated Operational Entities Executive Board

23 CO2 reduction independent of Kyoto Compliance Support to Voluntary Carbon Standard (VCS) certified projects Invest in a clean energy fund Donate to or support an NGO active in clean energy project development Set up alliances with clean energy companies (active) in developing countries

24 Rural Economic Development Invest in a rural enterprise fund Donate to or support an NGO active in rural economic development Set up alliances with companies (active) in developing countries

25 Thank you

Renewable Energy Development in Uzbekistan

Conference Integration of Central Asia into the World economy: Role of Energy and Infrastructure 22 October 2007, Washington D.C. Renewable Energy Development in Uzbekistan Technology Transfer Agency is