Access to Electrical Energy and Supply Reliability Hinder Economic Progress

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1 Access to Electrical Energy and Supply Reliability Hinder Economic Progress An estimated 621 million of population in Sub-Saharen Africa lacks access to electrical power and spends overproportionate amounts of household income on energy consumption; 1 90k barrels of oil are consumed daily to fuel 16TWh of energy production through Diesel generation sets an annual cost of USD1.6bn only for raw material at current price level; 2 Total energy demand is expected to increase to 3100TWh p.a. in 2040 from a current production capacity of 600TWh; 3 Annual lost sales due to unreliable energy supply fluctuates in the range of 3-5% while it can go up as far as 23% depending on country 2 Sources: 1) Africa Progress Panel 2015; 2) International Energy Agency; 3) Program for Infrastructure Development; 1

2 Growing Energy Demand Requires Significant Investments in the Power Sector IEA estimates that till 2040 a cumulative amount of USD1.25 trillion needs to be invested in the power sector alone which still leaves large parts of the economy being undersupplied; Since 2000 around 2/3 of investments went to produce energy for exported goods; additional investments need to be routed for local consumption; There is an abundance of resources including renewables that can be used; Renewable energy gradually achieved price competitiveness Total SSA energy demand / per capita 1 African economies have the unique opportunity to use clean energy supply as a basis of sustainable growth at competitive costs Investment needs exceed the financial capacity of governments Source: 1) Africa Energy Outlook

3 DB s Sustainable Investment Practice Investment Principals and Approach Sustainable Investments shall mobilize capital and produce positive; Environmental and / or Social returns; as well as Financial returns. Investments are: selected and executed in line with local and national priorities. aligned with positive social effects. subject to standards that target to preserve and protect a clean environment. monitored to produce the expected returns. The goal s of Sustainbale Investments are to Overcome the existing barriers to mobilise private sector capital to be invested sustainably; Increase the amount of capital from the public sector 2-3 times at a minimum Support the paradigm shift towards a low carbon behaviour;

4 Deutsche Bank s Experience Managing Sustainable Investments Overview of mandates of existing funds Existing funds Investment focus Committed Invested Agriculture and food production facilities in Africa US$ 142m US$ 110m Energy efficiency in the public sector in Europe EUR 265m EUR 115m Micro credit via local banks in Emerging Europe EUR 1.032b EUR 941m Energy efficiency via local banks in emerging Europe EUR 315m EUR 252m Micro credit via local banks in MENA US$ 129m US$ 82m 4

5 Climate Mitigation & Adaptation Range of investment activity matching with GCF s mission Mitigation Renewable energy production (on-grid and off-grid) Electrification using renewable energy sources Industrial energy efficiency Energy infrastructure (transmission lines) Support local financial sector investing in any of the above Adaptation Investments in agriculture and food processing (ie. DB managed African Agriculture Trade an Investment Fund) Catastrophe bonds reinsuring local insurance companies against extreme weather events Industry specific solutions (ie. irrigation industry) Investments need to be in partnership with local businesses and households to deliver sustainable results 5

6 Applicable Social and Environmental Guidelines Investments are screened against specific social and environmental criteria that span seven categories including social as well as environmental aspects for the benefit of affected communities and to preserve the environment. Land Acquisition and Involuntary Resettlement Labor and Working Conditions Community Health, Safety and Security Resource Efficiency and Pollution Prevention Biodiversity Indigenous Peoples Cultural Heritage Gender No funding of projects involving involuntary resettlement Protection of basic rights for workers and prevention of child labour Minimizing risks and impacts to community health, safety and security that may arise from investment activities (e.g. equipment accidents or contamination of fresh water sources for neighboring communities) Monitoring and diminishing the amount of pollution to air, water and land caused by an investment and promoting a more sustainable use of resources Protecting and conserving biodiversity the variety of life in all its forms, including genetic, species and ecosystem diversity and its ability to change and evolve Avoiding and minimizing the risk of exposing indigenous people to severity of impacts, including loss of identity, culture, and natural resource-based livelihoods, as well as exposure to impoverishment and disease. Safekeeping of irreplaceable cultural heritage and guidance for investees on protecting cultural heritage in the course of their business operations. Ensure a non-discriminatory environment; deliver towards inclusion of gender by results orientated action; 6

7 Contact Details Astrid Manroth Managing Director, Head Social and Environmental Capital Tel: +49(69) Michael Hoelter Director Tel: +49(69) Susanne Kern Vice President Tel: +49(69) Yoshiko Saito Vice President Tel: +49(69)