Best Practices In Decentralised Renewable Energy Access: Sharing Knowledge for Renewable Energy Enterprise Development June 15, 2014

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1 Best Practices In Decentralised Renewable Energy Access: Sharing Knowledge for Renewable Energy Enterprise Development June 15, 2014 Elmar Elbling Energy Specialist Asian Development Bank

2 Energy For All: Maximizing Access to Energy for the Poor Energy for All was launched in Pronged Strategy Internal Objective: Increase ADB s investment on energy access projects and enterprises to scale up access to affordable, modern, and clean energy among the regions poor using renewable energy technologies External Objective: Develop strategic partnerships and alliances with other stakeholders

3 Improved energy access (households) Energy Access Investment (in million $) Energy for All: Impact of ADB s Investment in Energy Access (Cumulative) 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Year Energy access investment Number of households Investment in energy access 2013: $984 million in New connections to electricity for 1.7 million households Improved electricity service to about 500,000 households The switchover of 90,0000 households currently burning traditional biomass to improved cookstoves

4 Energy for All: Energy for All Partnership ADB-led partnership to address energy poverty at the regional scale, established in 2009 Private sector participation is essential to achieve universal energy access by the Partnership aims to identify, replicate and scale-up best business models for energy access Set a target to provide 100 million new people with access to energy by 2015 The combined work of the partnership has provided 78 million people with access to electricity or modern fuels as of 2013

5 Implementation Approach Knowledge Sharing ENERGY FOR ALL Project Development Capacity Building Investment Facilitation

6 Energy for All: Project Development Facility Incubates business models from start-up to sustainability, helping to refine start-ups to become bankable investment opportunities. Main activities are: Project Development Identify credible projects together with in-country partners to ensure workable models Technology Transfer Piloting of demonstration projects to prove sustainability and commercial viability Investment Facilitation Partnerships with investors and financial institutions Referral of energy access enterprises in the investment portfolio of ADB s ODs Supports Investor Forums as a tool for presentation of energy access companies to potential investors

7 PDF in ACTION Energy for All Investor Forum The Energy for All Investor Forum is a venue wherein the energy access enterprises supported by the Energy for All Program are showcased to an audience of investors, financial institutions and other energy access stakeholders. Objective: facilitate investment for the most mature and bankable energy access enterprises in the Energy for All Pipeline, share industry best practices, business models and institutional arrangements, and create an opportunity for networking and partnership building. The Energy for All Investor Forum is an annual event held during the Asia Clean Energy Forum every June.

8 PDF Results SEMI-FINALIST FINALIST First Stage Sourced and identified 66 qualified business models from its partners Second Stage Supported 34 of these through business model mentoring Finalized Helped close 4 deals for new financing More models still in the process PROJECT DEVELOPMENT FACILITY SUPPORTED Business Model WS Register as a Partner Business Model Mentor Matching Customized Mentoring Business Model Financial Model Assumption Testing DEALS CLOSED Investment Facilitation Pitch Deck Investment Structuring Third Party Validation

9 Energy for All Projects: Pay as you go Solar, India Simpa Networks: energy access enterprise operating in India Utilizes an innovative, pay-as-you-go business model using SMS credits to purchase solar home systems Simpa Networks was featured in the Energy for All Investor Forum Through references given by the Energy for All Team, Simpa Networks was approved by ADB s PSOD for an equity investment. Energy for All worked with ADB s Private Sector Operations Division to perform due diligence and project design Result: Equity investment of $2 million $2 million is relatively small scale for ADB but project promises high impact and high replication potential Simpa will now be able to reach an additional 63,000 households

10 Project Development Facility Lessons Learned Activities have been key for building up new partnerships and collaboration with social enterprises and social investor networks New Ventures India Impact Investment Exchange (IIX) Climate Technology Initiative Private Finance Advisory Network (CTI-PFAN) Support and mentoring creates sustainable, bankable projects for ADB Simpa Networks was assisted by New Ventures and PDF, and in turn, attracted ADB private equity investment Helping projects mature alleviates risks for other investors, in order of decreasing risk: Impact first investors Private wealth funds Series A investors, Private equity Commercial banks

11 Key Challenges to be Addressed Financing Sustainable Energy for All Initiative estimates $50 billion a year of investments in electricity expansion and modern fuels will be needed to attain universal energy access by Policy and Framework Government capacity to support newer innovations and off-grid solutions is low. Creation of Sustainable Business Models for Energy Access Private sector/ energy access entrepreneurs need to be tapped. Poor communities have high willingness to pay but their ability to pay needs careful management.

12 Thank you! For more information: Elmar Elbling Energy Specialist

13 Potential Solutions Leveraging finance and involvement of private sector The floodgates to private sector investment need to be opened Energy for All partners with multilaterals, private sector and project implementers and supports innovative financing solutions Limited capacity of developing countries must be addressed Capacity building for sustainable development Policy remains main driver for change Energy for All supports workshops, training, and knowledge events Mentoring and Project Development Replicate and scale-up proven business models through project development Energy for All, with the help of its regional partners, is in a good position to identify and scale-up the best models Project Development Facility focuses on this