MALDIVES ASPIRE ACCELERATING SUSTAINABLE PRIVATE INVESTMENTS IN RENEWABLE ENERGY USING A SREP GRANT AND A WORLD BANK GUARANTEE TO SPUR RENEWABLE DEVELOPMENT CIF conference, July 20 th 2018
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MALDIVES ASPIREACCELERATING SUSTAINABLE PRIVATE INVESTMENTS IN RENEWABLE ENERGYUSING A SREP GRANT AND A WORLD BANK GUARANTEE TO SPUR RENEWABLE DEVELOPMENT
CIF conference, July 20th 2018
FINANCIAL STRUCTURING AND GUARANTEES TO SUPPORT PRIVATE INVESTMENT GLOBALLY
1
Financing mobilized with guarantees
Map of World Bank Guarantees operations
✓ $7.4 billion of guarantees issued ✓ 74 operations ✓ 43 countries
Maldives – ASPIRE solar rooftop (SREP & IDA guarantees)
India – Partial Risk Sharing Facility for Energy Efficiency
(CTF & GEF)
Vietnam – Risk Sharing Facility (GCF) - ongoing
Argentina –Renewable
program (IBRD guarantees)
Sub-Saharan Africa – Scaling
Solar (IDA guarantees)
MALDIVES CONTEXT
2
• Wide archipelago (#1200 islands, 200 inhabited)
• Land area scarce - only 300 km2 of land area
• High dependence on diesel and vulnerability to
price volatility & climate change
• Limited private sector participation in energy
SIGNIFICANT SOLAR POTENTIAL TO DISPLACE DIESEL
3
280 – 300 sunny days
per year on average
Daily Average Global
Irradiation in Maldives is
4.5-6 kWh/m2/day
No sharp seasonal
changes in solar
resources
Solar insolation and
variation at Malé
Source: GAISMA, derived from http://www.gaisma.com/en/location/male.html
Installation of solar PV
can displace diesel
generation & defer
capacity augmentation
PV potential
INTRODUCING ASPIRE - ACCELERATING SUSTAINABLE PRIVATE INVESTMENTS IN RENEWABLE ENERGY
4
▪ Maldives SREP Investment Plan adopted in October 2012
▪ ASPIRE aims to scale up solar PV up to 20MW
▪ Key focus to attract private sector participation
▪ World Bank approved in 2014 a series of IDA guarantees for US$16 million and a SREP grant for US$11.7 million
▪ For 20 MW, estimated savings of US$28-84 million (depending on diesel price) and US$42 million of private investments mobilized
▪ Initial project of up to 4 MW tendered in two lots in 2015-2016. First 1.5MW project operational in 2018
Other donors also promote renewable in Maldives. E.g:
- ADB-led POISED also uses SREP and targets installations of
10 MW solar diesel hybrid systems
- JICA through its JPY 1billion Project for Clean Energy
Promotion installed 740kW in 2014 (led by Japanese solar
panel company, Kyocera).
ASPIRE STRUCTURE & IMPACT OF CONCESSIONAL FUNDING ON THE PROJECT
5
1 – Technical Assistance Support to GoM (US$1.75 million)• Project management and implementation support• Pipeline development• Capacity building and knowledge sharing• Enabling private investment in PV (e.g. regulations)
Increase ability to plan and prepare renewable projects
3 – Security Package (US$19.9 million). US$3.9 million of SREP + US$16 million of IDA guarantees to (i) backstop payment delays under PPAs & (ii) termination caused by GoM. Mitigate payment risk – a key risk identified under the market sounding exercise
2 – Structuring and Delivery of Tariff Buy Down for subprojects (US$6.0 million) Reduce tariffs and ease renewable inclusion
ASPIRE PROGRAM FEATURES
6
▪ Private investors to Design-Build-Finance-Own-Operate-Transfer grid solar rooftop PV plant
▪ Bidder identified via competitive process/lowest tariff. 20 year PPA. Roofs provided by GoM
▪ SREP and IDA guarantee to address critical investment risk issues for investors
RISKS, MITIGANTS, AND OUTCOME
7
Risk/Issue Mitigant Outcome
Limited GoM experience
with PPPs
GoM engaged financial, technical
and legal advisors
Advisors helped a lot but sometimes slow
pace with limited dedicated staff in GoM
Delay in some decisions by GoM
Scarcity of land Solar rooftop but adequate
rooftops limited
Technical advisors identified the sites –
details were included in the RfP
Small market size and
remoteness
Aggregation of several
opportunities
First package of 4MW with two lots.
Same process/docs for whole program
Lack of adequate project
documents
Advisors/GoM/WB developed
internationally bankable project
documents
Documents and knowledge now available
Capacity built
Investors’ concerns about
risk of non-payment,
political risk and currency
convertibility issues
▪ Investors’ outreach. Comments
during bid
▪ Six-month escrow account
using a SREP grant
▪ IDA guarantee for termination.
Historically, projects with WB
guarantees do not have default
▪ Fair/attractive risk allocation
▪ 25 firms, mostly international,
purchased the bid documents
▪ Four bids (two more late/disqualified)
▪ 1st package (1.5 MW) awarded to
Chinese-Swiss consortium. Tariff of 21
USc/kWh – comparable with India’s 18
USc/kWh at same time.
▪ 2nd package (2.5MW) – to be rebid –
bidders did not meet technical criteria
PROJECT STATUS / CONCLUSION
8
▪ First 1.5MW Hulhumalé solar rooftop project built and operational. Displacing diesel and reducing CO2 emissions.
▪ Innovative SREP + IDA guarantee structure helped attract private investors.
▪ Delays in Government’s decisions slowed down progress but new rounds of biddings in preparation for additional 4MW.
▪ Technical assistance has built significant capacity and spread knowledge about renewable including on renewable mapping, planning, integration, net metering, and PPPs.
▪ Maldives’ experience shared with other countries/islands with limited land area that can also benefit from such schemes and use of climate finance.
THANKS
Arnaud BraudSenior Infrastructure Finance Specialist
Tel: +1 (202) 473 1028
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