EU policy financing
instruments for the
development of Renewable
Energy in the IO region
Hubert Grandjean
Délégation of the European Union in Mauritius
POLICY (1/3)
• EU Energy Initiative (EUEI) launched at the
2002 World Summit on Sustainable Development
held in Johannesburg.
• Joint commitment by EU Commission and
Member States to contribute to providing access
to energy necessary for achieving the MDGs,
particularly but not exclusively that of halving the
number of people in extreme poverty by year
2015.
2
POLICY (2/3)
• EU Agenda for change : increasing the impact
of EU development policy; adopted by EU council
in May 2012.
• Sets new directions on how to address poverty
eradication and development aid challenges
• Also looking ahead to Rio+20 outcomes and post2015 development agenda
3
POLICY (3/3)
• EU Agenda for change : priorities
• 1) Promotion of human rights, democracy, rule of law,
and good governance
• 2) Promotion of inclusive and sustainable growth:
• Inclusiveness focused primarily on social protection,
health and education,
• Support notably to sustainable agriculture and energy,
incl. natural resources management, key to transition
to green economies, and private sector as vector for
development
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INSTRUMENTS (1/5)
• ACP-EU Energy Facility (EF) created in 2005 to
respond to EUEI objective in the ACP region.
• Interventions :
• 1) Expansion of national power grid and distribution
network
• Examples: Use of the Cotonou investment facility by IEB in
Uganda: loan to a private concessionaire on loss reduction and
access (~ €100 million); Mozambique (public financing)
• 2) Electrification in connection with new transmission lines
• Example: Caprivi interconnector, financed by the ITF in Tanzania,
includes a rural electrification component
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INSTRUMENTS (2/5)
• EF interventions:
• 3) Proving funds to facilitate higher rate of customer
connections / mechanisms to reduce costs / facilitate
payment..
• Example: Discount in Burkina; Revolving Fund in Kenya (AFD)
allowing more affordable connection to customers (fee paid over
longer period)
• 4) Working through financial intermediaries to support
SMEs
• Assist accessing to international financing for small/medium scale
initiatives (example: Africa Sustainable Energy Facility project by
IEB; credit line awarded to DBS in Seychelles)
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• 5) Working through Rural Energy/electricity Agencies/Funds
INSTRUMENTS (3/5)
The SE4all - Sustainable Energy for All - initiative
launched by the UN in 2012 is supported financially
by the EU to the tune of 400 million Euros
Targets by 2030:
• Universal access to energy (target: 500 more million
people)
• Improved energy efficiency
• Enhanced deployment of renewable energy
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INSTRUMENTS (4/5)
EU financial support to SE4all initiative is directed
through several financial instruments:
1) EU-Africa Infrastructure Trust Fund (ITF) managed by EIB;
regional and national infrastructure only in the scope of
SE4all
2) European Development Finance Institutions EDFIs
(IEB,AFD, KFW, …)
3) GEEREF (Global Energy Efficiency and Renewable Energy
Fund); fund-of-funds for small/medium sized projects
4) EU energy facility (EF) envelope for calls for proposals
managed by EU Commission (last call: end 2012)
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INSTRUMENTS (5/5)
Others tools:
EU Technical Assistance Facility on energy access for the S4A
initiative (47 M. EUR): to target countries for increasing
admin./technical capacity and implement reform policies.
Direkt –Small Developing Island Renewable Energy Knowledge
and Technology Transfer Network – a project of cooperation
between universities (Germany, Fidji, Mauritius, Barbados,
Trinidad Tobago) funded by EU under the ACP science and
technology programme.
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The blending of different types of supports
for greater leverage
1. Direct investment grant and interest rate subsidy
grants, decrease the investment cost for sponsors.
2. Technical assistance accelerates projects and
improves quality, efficiency and impact.
3. Risk capital (i.e. equity & quasi-equity) mobilises
additional financing (presently MSME only).
4. Guarantee mechanisms reduces risk and improves
access to finance.
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The ITF Infrastructure Trust Fund:
leverage and main EFI users 2007-12
76 approved applications supported with
an expected total cost of
> €8.5 billion
•
PFG's resources leveraged
> € 2.0 billion
ITF resources allocated to approved
applications
> € 390 million
LEVERAGE
PFG resources/
ITF grant*
Total project cost/
ITF grant*
* Investment phase only
7.1
Lead EFI financier (based on cumulative grant
value approved by ITF)
12.5
11
ITF overview 2012
ITF overview
ITF approvals
€approvals
million
2007
2008
2009
2010
2011
2012
4
4
11
19
19
19
2007
15.3
2008
47.8
31.5
2009
110.9
83.7
94.5
2010
2011
2012
ITF signatures
€projects
million
2007
2008
2009
2010
2011
2012
2007
6
1
6
15
1
2008
59.5
2.8
2009
12.1
86.4
2.4
2010
2011
2012
ITF disbursements
€projects
million
2007
2008
2009
2010
2011
2012
0
5
12
14
30
23
2007
2008
1.1
22.4
22.4
8.4
2010
17.5
34.4
2011
2012
Cumulative approvals
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Example1:
Ouarzazate solar
power plant (NIFENPI countries)
Direct investment grant
Part of the Moroccan Solar Plan. If fully
developed (2GW target capacity), the
largest solar power plant in North Africa.
Project promoter is the Moroccan Agency
for Solar Energy (MASEN).
Independent power producer (IPP) to
implement the project is determined by
MASEN through competitive bidding.
NIF direct investment grant to bring down
the cost of electricity during the initial
stage of the project.
Total project volume: approx. €807 million
Grant contribution: €30 million
Involved FIs: EIB, AFD, KfW, IFC, WB
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Example 2: Africa
Sustainable
Energy Facility
Guarantee
mechanism
Increasing the role of the private sector in
financing climate change activities by
promoting climate finance through local
financial intermediaries
EU grant resources (up to €5m) can be
used to guarantee 50% of the first-loss on
a portfolio of new loans for energy
efficiency and renewable energy projects
originated by local (private sector) finance
institutions, who retain the remaining risk.
Combined with €3M TA program to
support local project developers and build
local finance institution capacity.
Total project volume: up to €50 million
Involved FIs: EIB, IFC
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Example 3:
Seychelles East
Africa Submarine
Cable (SEAS)
Grant
IRS
Mauritania
Submarine Cable
SEAS cable link directly into a landing station
of ZANTEL in Dar es Salaam, from where
other international fibre systems are accessed.
Total project cost is €26.6 M.
Financing of EIB : loan of €8 M, plus ITF grant
of € 4M financing GoS equity stake in the cable
company created and held by the two main
telecom operators and the GoS.
The model allows for social benefits in terms of
ICT access for schools, hospitals..
Similar project in Mauritania, where the grant
was used as an Interest Rate Subsidy IRS to
soften EIB loan to the Government.
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Other blending
mechanisms
GEEREF : Global Fund of funds
catalyzing investments for
energy efficiency and renewable
energy projects, 2 investments
in Sub Saharan Africa
European Development
Financing Institutions EDFI
€50M first loss guarantee
mechanism in the context of
SE4all (under negotiation)
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Geothermal Risk
Mitigation Facility
(GRMF)
To encourage public & private investors to mobilize & provide
funds for development of geothermal power plants in East Africa
Pilot Countries: Ethiopia, Kenya, Rwanda, Tanzania, Uganda;
Additional countries next round: Burundi, Comoros, Djibouti,
DRC, Eritrea & Zambia
Geothermal
Risk Mitigation
Facility
30 Mio. €
Surface
studies
“GRMF”
Database
Private/ Public Investors
Drilling
20 Mio. €
EU- ITF
AUC Regional Geothermal Coordination Unit (RGCU)
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The EU regional programme for Renewable Energy and
Energy Efficiency Improvements to IOC member
states (1/3)
Financed by EU (10th EDF) to the amount of 15 million Euros
Status: Financing agreement signed with IOC in June 2013;
Forecast start activities: March 2014; max duration 4 years;
Expressions of interest on going for the technical Assistance;
Objective: Establish conditions for the development, investment
and sustainable management of renewable energy and
improvements in efficiency of energy use in IOC region
Five expected results:
1) A regional IOC strategy focussed on HR development and
institutional building is agreed and implementation started
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EU Regional programme for RE and EE Improvements
to IOC member states (2/3)
Expected results (cont.):
2) A RE&EE promotional campaign and advocacy plan is developed,
agreed and implemented
3) The regulatory and business environment for RE based gridconnected electricity generation has been improved; wind and solar
resource data bases have been further developed
4) Government agencies and private investors have developed their
capabilities to design, engineer, construct and operate decentralised
electric power / energy systems based on renewable energy
5) Energy efficiency standards and labels have been developed and
implemented in most IOC member countries a) for all categories of
buildings and b) for household appliances and equipment with major
impact on electricity consumption and peak load
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EU Regional programme for RE and EE Improvements
to IOC member states (3/3)
Implementation
-
Investigating the use of available policy and financial instruments
cited above so as to generate leverage and co-financing/ blending
opportunities, in particular but not limited to the scope of the call for
proposals scheduled in project activity 4.
-
Promoting partnerships and networking at an early stage among all
stakeholders including in particular the private sector.
-
Promoting coordination mechanisms at national/regional levels and
with other donors in the energy sector so as to create synergies.
-
Targeting activities and results with high impact for the sector and
the countries with due consideration to EU and SE4A priorities.
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Thank you
Délégation of the European Union in Mauritius