3-4 september 2012, Tunisia Ass. Prof. Amel Belanès High Institute of Management of Tunis – Tunisia [email protected]Socio-economic development in the era of renewable energies: Towards the creation of a research institution for the MENA region based on the DESERTEC concept
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Identification of financial sources & supporting bodies
Identification of financial sources & supporting bodies. Socio-economic development in the era of renewable energies: Towards the creation of a research institution for the MENA region based on the DESERTEC concept. 3-4 september 2012, Tunisia. Ass. Prof. Amel Belanès - PowerPoint PPT Presentation
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3-4 september 2012, Tunisia
Ass. Prof. Amel BelanèsHigh Institute of Management of Tunis
Socio-economic development in the era of renewable energies:
Towards the creation of a research institution for the MENA region based on the DESERTEC concept
1. Conventional methods of projects financing
2. What attracts capital to finance renewable energy?
3. What are the renewable energy finance handicaps?
4. Supporting bodies of renewable energy
5.How do financial institutions contribute?
6. What are the factors determining the appropriate financing mechanism?
7. How can we innovate in financing sources and mechanisms?
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Project financing
Corporate finance
Lease financing
Subsidies
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Project financing Limited recourse financing to the cash flows of
the project Corporate finance
Retained earnings otherwise paid to stockholders Equity financing Stock issuance Short-term borrowing from financial institutions Sale of long-term bonds
Direct business profits Business opportunities Secure, sustain or reduce costs of key natural
resource inputs required for business operations
Securing license to operate and avoiding losses from protests
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Indirect business benefits “Green” branding, marketing Improved staff pride and morale and enhanced
recruitment Reflect broader business values of the
corporation
Not-business related benefits Philanthropy / Charity
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Several barriers before penetrating the market Lack of technical capacity Lack of supportive policy frameworks Inadequate financing for installations or supporting
businesses Lack of awareness and trust in the
technologies by users and utility companies
Benefits accrue on the long run
Appropriate regulatory framework
Provision of the infrastructure to make the local economy viable
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Global Environmental Facility (GEF) The United Nations Development
Programme (UNDP) The United Nations Environment
Programme (UNEP) The world Bank Regional development banks Executing Agencies under the policy
of expanded opportunities
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Global Environmental Facility (GEF)
Independent financial organization, established in 1991 Grants to developing countries for projects that
benefit the global environment and promote sustainable livelihoods
Removed barriers to developing markets for renewable energies wherever cost-effective
Enabling policy frameworks, capacity for understanding and using the technologies
Financial mechanisms to make renewables more affordable GEF’s three implementing agencies : UNDP, UNEP and the
world Bank
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The United Nations Development Programme (UNDP)
UN global development network, funded entirely by voluntary contributions from member nations in 1966
Solutions to develop local capacity and meet global and national development challenges
Change and exchange of knowledge, experience and resources to help people build a better life
Expert advice, training, and grant support to developing countries, with increasing emphasis on assistance to the least developed countries
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The United Nations Environment Programme (UNEP)
Programme rather than an agency of the UN found in 1972
Developing international environmental conventions, promoting environmental science and information and illustrating the way to be implemented
Funding and implementing environment related development projects
Assisting developing countries in implementing environmentally sound policies and practices
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The world Bank
UN agency created in 1944 and focus on economic growth
Since the 1992 Rio Declaration, activities promoting the environment and human rights
“Safeguard” policies: the minimum environmental and social requirements expected of borrowers, developed in the 1980s and gradually updated
2006, Sustainable Development Network 2010, a progressive “access to information”
policy
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Regional development banks
The Asian Development Bank, Inter-American Development Bank, European Bank for Reconstruction and Development, and African Development Bank
Development Business Programme
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Invest directly in projects Provide direct budget support to
government for policy reforms By injecting money directly into the government
treasury, full discretion on how to use this money Leverage further investments
By managing climate change trust funds that attract other investors
Share knowledge By providing expert advice to governments and
companies on sustainable development best practices
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National level context
Site-specific context
Economics practices
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National level context Institutional & Governance (vision +
capacity)
Stable political and economic environment
Regulatory framework in place
Environmental awareness
Understanding of social and economic impact of unsustainable land management
Site-specific context Economics practices
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National level context Site-specific context
Ecosystem type and use and current use of the land
Capacity to enhance environmental services
Local capacities (social capital, infrastructure, space for discussion)
Land tenure situation
Economics practices
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National level context Site-specific context Economics practices
Demand and supply
Cost and cost-effectiveness
Required time for development and implementation
Amount of resources generated
Synergies with other thematic priorities
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Why innovative financing?
What is innovative financing?
Innovative financing models for renewable energy
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Aim to : Increase resources availability
Diversify the resource base
Complement traditional funding
Maximize the projects financial profitability
Can provide direct incentives to engage in renewable energy projects
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Innovative sources and mechanisms of funding are non-traditional modes of financing
Innovative funding includes resources from internal, external, private or public sources
Innovative funding can be mobilized through financial mechanisms and instruments
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Clean Development Mechanism Dealer-Credit Model Consumer Credit Model Supplier Credit Model Energy Service Company Model Revolving Fund Green Venture Capital Fund
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Developed countries (Annexes-1 ones)
reduce emission in a flexible and cost-effective manner
obtain Certificates of Emissions Reductions
Developing countries (non-Annex I called the “host countries”)
meet sustainable development objectives
benefit in the form of investment, access to better technology, and local sustainable development
Energy Service Company
Provides Energy Customers
Pay Fee to the energy service
company
Commercial Financers
Government or Multilateral Sources
Ownership and maintenance of the equipment lies with the energy service company
Customers pay for the energy service that is provided by an energy service company (ESCO)
Energy becomes more affordable
Less long-term risks
Investment model: “socially responsible investing” or “the triple bottom line”
Investments from GVCFs can be in :
Loans: for small and medium enterprises which contribute to sustainable development