07/15/981 Winrock International FINANCING WORKSHOP John Kadyszewski Winrock International June 19, 1998 ASES Solar 98.

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FINANCING WORKSHOPFINANCING WORKSHOP

John KadyszewskiWinrock International

June 19, 1998

ASES Solar 98

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OverviewOverview

• Winrock Perspectives

• Primary Challenges

• Winrock Actions

• What have we learned?

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Winrock PerspectivesWinrock Perspectives

• Private capital essential for renewable energy market development

• Global privatization of power sector bypassing rural areas

• New technology changing development options

• New role required for public institutions

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Goal—Attract

private capital

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New Role for Public InstitutionsNew Role for Public Institutions

• Set development priorities

• Create enabling environment

• Reduce credit risk

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Primary ChallengesPrimary Challenges

• Make markets visible

• Develop local operational infrastructure

• Lower investment transaction costs

• Improve access to credit

• Increase ability to pay

• Reduce the real cost of capital

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Cost of CapitalCost of Capital

GDP

Real Interest Rate

Time

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Winrock ActionsWinrock Actions

• Build local capacity

• Implement model projects

• Catalyze investment

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Build Local CapacityBuild Local Capacity

• YBUL• PEI• Fundacíon Solar• REGAE• EACA

• SELCO• MICROSUL• ABEER• ACOPE• APETINDO

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What have we learned in Asia?What have we learned in Asia?

• NGOs manage small wind systems in Indonesia

• Subsidy-free PV in India

• Lower transaction costs in China

• Financing renewables in the Philippines

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Indonesia Wind SystemsIndonesia Wind Systems

• Target markets where energy willincrease income

• Strengthen NGO capability tomaintain systems and collect fees

• Technical assistance to assureincome growth

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Marketing Mechanisms of Marketing Mechanisms of SELCO IndiaSELCO India

• Cash sales

• Sales through banks

• Leasing

• Sales via IREDA loans

• Sales through local institutions

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Preparing Projects in ChinaPreparing Projects in China

• Form local joint venture company

• Prepare projects for Swiss environment fund

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PEI Finances Renewable EnergyPEI Finances Renewable Energy

• Strengthen enabling environment

• Conduct local due diligence

• Reduce transaction costs

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What have we learned in Latin What have we learned in Latin America?America?

• Financing operational infrastructurein the DR

• Invest through communities in Brazil

• NGO investment in Guatemala

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REGAE--Financing Operational REGAE--Financing Operational Infrastructure in the DRInfrastructure in the DR

• Lease-to-own program

• Provide credit for service companies

• Co-invest with local banks

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Invest Through Communities Invest Through Communities in Brazilin Brazil

• World Bank loan for Ceara, Bahia, and Minas Gerais

• 1-3 million households over 10 years

• Follow community priorities

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NGO Investment in Guatemala--NGO Investment in Guatemala--Fundacíon SolarFundacíon Solar

• Educate donors on importance of credit versus gifts

• Link renewables with relevant applications

• Leverage new funds

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Fundacíon Solar NGO PartnersFundacíon Solar NGO Partners

• Plan International

• World Vision

• UN High Commissioner for Refugees

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New Technology New Technology Changing OptionsChanging Options

• Improved access to information

• New ways to increase rural productivity

• Enhanced quality of life

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Stages of Finance in ChinaStages of Finance in China

• Allocation of government resourceswithout recovery

• Allocation with recycling

• Recycling with market interest rates

• Commercial financing

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Renewable Energy IssuesRenewable Energy Issues in China in China

• Affordability

• Manage credit in concert with ability to pay

• Avoid damaging markets with subsidies

• Create new pathways for finance

• Move from allocation to market returns