Green Mini Grids Market Development Programme

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Green Mini Grids Market Development Programme Dr. Daniel-Alexander Schroth Coordinator SE4ALL Africa Hub - AfDB ECOWAS Sustainable Energy Policy & Investment High Level Forum SESSION 12: Triggering Investment in Clean-Energy Mini-Grids 16 September 2015 Golf Hotel Abidjan, Côte d Ivoire

Few facts on Energy Access in SSA 1. Access to electricity increasing, but not enough to achieve universal access by 2030 2. Between 2010 and 2012 in urban areas access growth exceeded population increase by 25 million; in rural areas, it fell short by 23 million (GTF) 3. Only 15 % of current rural habitants are connected to electricity (GTF) 1 800 Million 1 500 1 200 900 600 300 2012 2020 2025 2030 2035 2040 Population with electricity access Population without electricity access Source: IEA 2014

By 2030 66% of all unconnected people will be in SSA Population without Access Source: GTF, 2015

By 2040 70% of new rural demand in SSA will be from off-grid and mini grids... Source IEA, 2014

...two thirds of which powered by renewables Technology mix for mini-grids & off-grid in sub-saharan Africa, 2040 Mini-grid: 26 TWh Off-grid: 12 TWh 8% 3% 4% 2% 20% 32% Oil Solar PV Hydro 12% 35% Wind Bioenergy 37% 47% Source IEA, 2014

High Impact Opportunity - HIO Strong Case for the development of clean mini grids to achieve universal access in rural areas. A High Impact Opportunity for Clean Mini Grids has been created by SE4All, to promote the coordination of actors and advance actions. Members of the HIO include amongst others ARE, EUEI- PDF, UNEP, USAID, DFID, GIZ, AfDB, ECREEE, Private companies, foundations and NGOs. The HIO produced a mapping of support providers and programmes for clean mini grids. HIO members were involved in the consultation process for the GMG Market Development Programme

Context DFID GMG Africa regional Facility Sustainable Energy Fund For Africa (10m GBP) ESMAP Action Learning And Evaluation (5 m. GBP) SE4ALL Africa HUB Country Programmes Market Development Programme

GMG Market Development Program Implemented by the SE4ALL Africa Hub in collaboration with SEFA. In the framework of SEFA Component III, Enabling Environment. A mix of internal staff and advisory services. Designed with a consultative process with SE4ALL stakeholders, the HIO participants, expert and practitioners. Reflects the areas of intervention established by the HIO and actively collaborates with some of the HIO partners on its implementation Multi phased: to assure greater degree of flexibility to adapt to the changing landscape, closer coordination with partners and gradual take-off in parallel with increasing internal implementation capacity. Learning form the experience of Lighting Africa

MDP objectives Removing or reducing market barriers and strengthening the ecosystem for the scaling-up of GMGs investments in Sub-Saharan Africa How? Promoting a pan-african network of expertise on Green Mini Grids; Ensuring coherence with SE4ALL Action Agendas and Investment Prospectuses; Strengthening capacity of developers to develop / operationalize GMGs business models; Engaging project financiers and supporting the development of suitable financial solutions; Promoting a sound policy and regulatory environment; Providing an interface with leading sector participants and groups (including the HIO Secretariat, development partners, private sector industry associations and civil society organization).

Market Development Programme Barriers / Business Lines Barriers Identified Business Lines 1. Early stage market fragmentation 1. Market Intelligence 2. Lack of proven commercial business models 2. Business Development Support 3. Inadequate regulation, policy gaps or uncertainty 3. Policy and Regulatory Support 4. Human Skills, Institutional capacity issues and lack of standardization 4. Quality Assurance 5. Lack of access to affordable longer term finance 5. Access to Finance

Partners / Beneficiaries Project Developers: Public institutions (like public utilities, rural electrification agencies, local institutions), Community or private developers, Public Private Partnerships (PPP). Customers/Communities including anchor clients (e.g. telecoms), Businesses (e.g. local MSMEs), and community customers (i.e. households and public services). Governments, Regional Institutions, Public Sector involved in the preparation of laws, regulations, codes and standards for quality assurance, legal frameworks. Business/ Industry Associations involved in supporting and representing their members through advocacy, research, networking and events. Financial Institutions involved in the provision of risk, equity and debt capital for GMGs projects, as well as risk-mitigation instruments. This includes private investors, local commercial banks, development finance institutions and governments.

1. Market Intelligence OBJECTIVE: Foster the ability of project developers and energy planners in identifying market solutions for decentralized provision of energy services. PARTNERS Project Developers, Public Entities ACTIVITIES: First Implementation Phase: 1 - An evaluation of the methodologies and best practices available for assessing GMG potential; 2 - The creation or choice of an opportunity assessment methodology in order to generate comparable data across countries; 3 - The publication of country-level analysis on mini-grid market opportunities, initially focusing on 5 countries in Sub-Saharan Africa that are prioritising GMGs. Subsequent Implementation phases Focused networking events and further methodological work on market intelligence areas as needed, including productive uses and identification potential energy sources.

2. Business Development Support OBJECTIVE: Support project developers for project identification, preparation and financial closure. PARTNERS Project Developers, Customers/Communities ACTIVITIES: First Implementation Phase: 1- Developers support needs survey 2- Set-up of tailored on-demand advisory services that will include both desk-help and in situ missions. These services will provide advice to project developers on a series of issues including financial structuring, fundraising agenda, government interface, human resources, institutional capacity, and community engagement. Subsequent Implementation phases Continuation of advisory services, dissemination of developer guides, technical and financial support for the start-up of GMG organizations, set-up of a GMG mentorship scheme, creation of a GMG Africa Awards

3. Policy and Regulatory Support OBJECTIVE: Reinforce regional support and political backing, provide regional policy reference. PARTNERS Government, RECs, African Union ACTIVITIES: First Implementation Phase: Development of a GMG Africa Strategy containing a set of principles on GMGs to be adopted by the AU. The objective is to raise the profile of GMGs amongst African Governments and provide a strategic framework and impetus to the scale-up of GMGs in Africa. Subsequent Implementation phases Advisory services on policy and regulatory matters to national governments and public institutions and related orientation and capacity building activities

4. Quality Assurance OBJECTIVE: Reinforce standardization and quality control. PARTNERS Regulators and Industry associations; RECs, Rural Energy Agencies ACTIVITIES: This Business Line will not start immediately. Subsequent Implementation phases - Assistance for policy support for regional approaches to GMGs quality standards and codes of practice in collaboration with Regional Economic Communities/Power Pools, Regional Regulators and Rural Energy Agencies. - Capacity building services for Industry Associations and national standards laboratories to develop suitable technical and performance standards of GMGs equipment, labeling as well as codes-of-practice in installation, maintenance and financing.

5. Access to Finance OBJECTIVE: This business line is focused on overcoming the dearth of competitive and adequate financing options for GMG projects. PARTNERS Financial Institutions, Project Developers ACTIVITIES: First Implementation Phase: 1. A supply-side scoping, including review and analysis of existing public and private funding and technical assistance facilities operating in the energy access domain in Sub-Saharan Africa, their terms, and their limitations; 2. A demand-side analysis, including financial simulations of different project types, mini-grid financing needs and potential returns, and a collection of case studies; 3. Expert and stakeholder interviews on a Financial Intermediation/Support Initiative for GMGs, and initial recommendations on such initiative. Subsequent Implementation phases Depending on the outcomes of the first phase, financial intermediation initiative, training for commercial financing institutions and networking with local institutions.

Timeframe GMGs Market Development Program Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Market Intelligence Business Developement Support Policy and Regulatory Support Access to finance Project design work for 2nd phase of Market Development Component

GMG country support programmes SEFA has set aside an indicative budget of USD 5 million to support enabling environment interventions in a first batch of 5-6 African countries to unlock private investments in GMG. These are to be country-specific programmes that are intended to support the GMGrelated priorities identified in the SE4ALL Action Agenda process. The specific areas to be addressed are defined based on need by applicant countries, and can span across sector planning, regulatory and policy interventions and market development and coordination work. Selection process: EOI launched in June deadline on the 1st July 2015 Strong response : 20 EOIs submitted Key criteria include alignment with SE4ALL AAs, market potential, and relevance of interventions Evaluation ongoing by SEFA technical committee will be completed shortly 5 to 6 African countries to be selected for SEFA grant request processing in 2015-16

Thank you! AFRICAN DEVELOPMENT BANK Contact: Dr. Daniel-Alexander Schroth d.schroth@afdb.org Mr. João Duarte Cunha j.cunha@afdb.org Mr. Andrew Carter, a.carter@afdb.org