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International REEEP Secretariat Page 1 Vienna International Center / D1732

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SIXTH REEEP PROGRAMME CYCLE: CALL FOR PROPOSALS

1. BACKGROUND REEEP is a voluntary multi-stakeholder partnership contributing to the implementation of agenda 21 and Johannesburg Plan of Implementation (JPOI). REEEP was established at the Johannesburg World Summit on Sustainable Development in 2002 with an objective to expand the global market for renewable energy and energy efficiency. REEEP currently consisting of over 200 partners including 35 governments achieves this objective through its initiatives, interventions and programme. Under its programme REEEP extends financial support to high quality renewable energy and energy efficiency projects that target business, financing, policy and regulation issues. The REEEP Programme has so far offered support to 51 projects spread in 44 countries, funded by the Governments of United Kingdom, Ireland and Italy. More information about the current projects being supported by REEEP is available at www.reeep.org

We are pleased to announce a sixth cycle of funding from Governments of Norway, United Kingdom, Ireland, Italy and New Zealand to support a new set of projects to further REEEP objectives.

2. KEY FEATURES Proposals will be considered from organisations, including REEEP partners active in policy & regulation and business & financing aspects of renewable energy and energy efficiency. The key features of the programme cycle are:

The level of REEEP financing will be an average of about € 100,000 per project. Funded projects will be implemented over a 12-month, 18-month or 24-month period from July 2007.

REEEP expects to fund about 30 projects using funds of over € 3 million available from Governments of Norway, United Kingdom, Ireland Italy and New Zealand.

Priority will be given to proposals that target the energy efficiency sector and also business & finance issues.

Priority will furthermore be given to proposals from local organisations based in the specified priority countries or by external organisations with significant local participation.



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REEEP will not support projects where majority of the resources are requested for workshops, seminars, study-tours or conferences. These events could be part of a project proposal only if they are part of a larger process and only consume limited share of resources.

All proposals need to respond to REEEP programme priorities articulated at Annex A. The donors – Norway, United Kingdom, Ireland, Italy and New Zealand have specified specific priorities and the proposals will thus need to focus on these priorities. Please refer to Annex B for details.

More details about the project call for proposals are given in subsequent sections.

3. IMPORTANT DATES The timetable for the sixth programme cycle is given in the table below. The final list of selected projects will be announced in late June 2007 and implementation is expected to begin in July 2007.

Table 1: Timetable

Milestone Date

1 Submission of concept proposals 30th March 2007

2 Publication of short-lists 20th April 2007

3 Submission of full proposals 11th May 2007

4 Publication of final results 27th June 2007

5 Project implementation begins 1st July 2007

4. PRIORITIES All proposals should address the specified REEEP programme priorities in policy & regulation and business & financing and target the programme performance indicators (available at Annex A). The donor objectives are available at Annex B. Projects should have a geographical focus in one or more of the priority countries.

5. PROJECTS TO BE SUPPORTED 5.1. Funding from the Governments of Norway and United Kingdom

REEEP will support up to twenty-three1 energy efficiency or renewable energy projects under its programme component to be funded by the Governments of Norway and the United Kingdom.

1 Including the six projects that are being commissioned.



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The countries where the projects can be implemented will be emerging economies of Brazil, China and India as well as Mexico and South Africa. Limited number of proposals from African LDCs2 can also be considered.

The Governments of Norway and United Kingdom will also support three pilot initiatives comprising of six projects as follows3:

Replication or scale-up of one successful REEEP project supported in the third call during 2005/06;

Commissioning of two projects with countries and Financial Institutions that are REEEP partners4;

Three commissioned projects that seek to synthesise the experience gained so far from REEEP projects; Development and publication of a REEEP report on Energy Efficiency and design and establishment of a financial risk mitigation mechanism.

All proposals need to focus on the REEEP programme priorities given in Annex A and the Government of Norway priorities and Government of UK priorities specified in Annex B.

5.2. Funding from the Government of Ireland REEEP will support up to three energy efficiency or renewable energy projects under its programme component to be funded by the Government of Ireland. Where possible Governments of Norway and Ireland will jointly finance projects in the priority countries identified below.

The priority countries for implementation of these projects will be Ethiopia, Lesotho, Mozambique, Tanzania, Uganda and Zambia. Projects may also target more than one of the priority countries.

All proposals need to focus on REEEP programme priorities given in Annex A and the Government of Ireland priorities specified in Annex B.

5.3. Funding from the Government of Italy REEEP will support two projects under its programme component to be funded jointly by the Governments of Italy and United Kingdom.

The priority countries where the two projects can be implemented will be Algeria, Egypt, Libya, Morocco and Tunisia. Projects may also target more than one of the priority countries.

All proposals need to focus on REEEP programme priorities given in Annex A and the Government of Italy priorities specified in Annex B.

2 Least Developed Countries. For a list of LDCs refer to: http://www.un.org/special-rep/ohrlls/ldc/list.htm 3 For more details refer to the section 6 on pilot initiatives. 4 As on 1st March 2007



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5.4. Funding from the Government of New Zealand REEEP will support one small project under its programme component to be

funded jointly by the Governments of New Zealand and United Kingdom.

The priority countries where the project can be implemented will be LDCs in the Pacific. Projects may also target more than one of the priority countries.

Full proposals can be submitted under this component and possibility of supporting workshops; seminars or study tours are not excluded.

All proposals need to focus on REEEP programme priorities given in Annex A and the Government of New Zealand priorities specified in Annex B.

6. PILOT INITIATIVES Based on the experience gained from its programmes thus far, REEEP would be piloting the commissioning of projects where projects will be identified and supported through a combination of ‘top-down’ and ‘bottom-up’ approaches. These commissioned projects are pilot with support from the Governments of Norway and United Kingdom.

6.1. Replication and Scale-up REEEP with the support of the Governments of Norway and the United Kingdom would pilot a funding stream aimed at supporting the next stage of development of the 18 projects supported through REEEP’s third programme cycle 2005/06 that have been successfully completed. It is expected that replication and scale-up projects will:

Seek to replicate the successes in new REEEP priority countries or scale-up the efforts in the current country (s) of focus;

Provide better value for REEEP investment than the first stage of support in terms of larger scale of leverage or impacts.

Full proposals for replication and scale-up should be submitted to the International Secretariat by 18th May 2007;

6.2. Projects with Governments and Development Financial Institutions REEEP with the support of the Governments of Norway and the United Kingdom would pilot a funding stream aimed at REEEP directly engaging and responding to needs from key partners4. It is expected that commissioned projects with governments, development financial institutions5 and development agencies6 will be developed through the following steps:

5 Multi-lateral, bi-lateral or national development banks promoting renewable energy and energy efficiency; 6 UN, multi-lateral or bi-lateral government development agencies



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A REEEP partner country or development financial institution partner will request REEEP International Secretariat for support to implement a project in line with REEEP priorities. The request can be in the form of a letter and should be accompanied by a draft project concept;

REEEP would select two of the requests received and would work with the two partners through the REEEP regional and international secretariats to develop, find resources and the expertise and commission the project.

6.3. Commissioned projects REEEP with the support of the Governments of Norway and the United Kingdom would commission the following projects:

An analytical study synthesising the experience gained so far from REEEP programmes and identifying lessons learned and good practices from REEEP projects. The project terms of reference are available at Annex C.

Development and publication of a REEEP Report on Energy Efficiency for 2008 covering the market, policy, stakeholders and key initiatives. The project terms of reference are available at Annex D.

Design and establishment of a risk mitigation mechanism to manage the investment risks in renewable energy or energy efficiency. This project will be implemented by REEEP working together with banks and insurance companies. The project terms of reference are available at Annex E.

For the commissioned projects, REEEP will accept pre-qualification requests using the REEEP pre-qualification form for commissioned projects till 30th March 2007. Short-listed firms would be invited to submit full proposals for consideration.

7. SELECTION PROCESS The concept proposals and the full proposals should be submitted to the relevant REEEP regional secretariats or the International Secretariat in accordance with the type of the project and the geographic focus specified as follows:

New Projects supported by the Governments of Norway, United Kingdom, Ireland and Italy will be selected through a two-stage selection process where a concept proposal is submitted, short-listed and full proposal invited7. Proposals should be sent to the regional secretariat responsible for the priority country being focussed. It is expected that 10 proposals each will be short-listed in East Asia, Latin America, South Asia and Sub-Saharan African regions and 5 proposals each in the Mediterranean region and that are inter-regional.

7 Refer to REEEP Programme Manual : REEEP Project Line for details.



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Proposals for replication and scale up and the small project supported by the Governments of New Zealand and United Kingdom will follow a single stage process and be submitted in full to the REEEP International and South East Asia and Pacific Secretariats respectively. Full proposals8 can be submitted for both these components.

The two pilot projects with governments and development institutions supported by the Governments of Norway and the United Kingdom require submission of a request and a project concept from the government or development financial institution to the REEEP International Secretariat by 30th March;

For the three commissioned projects a REEEP pre-qualification form should be submitted to the International Secretariat by 30th March and proposals will then be invited from short-listed firms;

All the project proposal submissions should be made to the designated e-mail addresses9 using the REEEP Bid Form Version 3 or REEEP Bid Form for Commissioned Projects, following the instructions at the end of the respective forms. Also please refer to the model application forms provided. The selection process and the other details about the programme processes are available in the REEEP Programme manual – REEEP Project Line Version 3.

8 Both A and B section of the application completed and declaration signed. 9 Please visit www.reeep.org for the bidding groups, information and all the documentation specified.



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Table 1: Overview of Sixth Programme Cycle

Geographic focus Donor Projects and size

Selection process

Projects in rapidly emerging economies of Brazil, China, and India. Limited projects may also be supported in Mexico and South Africa.

17 projects averaging

€ 100,000

Two-stage selection process with proposals being accepted in Latin America & Caribbean, East Asia, South Asia and Sub-Saharan Africa

Pilot project for replication and scale up.

1 project averaging €100,000

Single stage selection process with proposals being accepted at the International Secretariat

Pilot Commissioned Projects with governments/DFIs

2 projects averaging €100,000 each.

Request letters and concepts accepted by the International Secretariat and full proposals jointly developed

Commissioned projects on synthesis study, global status report on energy efficiency and risk mitigation mechanism.

Norway and United Kingdom

3 projects averaging €100,000 each

Pre-qualification and tender through International secretariat

Projects in Ethiopia, Lesotho, Mozambique, Tanzania, Uganda and Zambia

Ireland and Norway

4 projects averaging €100,000 each.

Two-stage selection process with proposals being accepted in Regional Secretariat for Sub-Saharan Africa.

Projects in Algeria, Egypt, Libya, Morocco and Tunisia

Italy 2 projects averaging €100,000 each.

Two-stage selection process with proposals being accepted in Focal point for Mediterranean

Projects in LDCS in the Pacific

New Zealand

1 small project averaging €30,000.

Single stage selection process with proposals being accepted in Regional Secretariat for South East Asia and Pacific.



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The full information about the REEEP Sixth Programme Cycle and the complete set of documentation is available at

www.reeep.org



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Annex A

REEEP Programme Priorities 2007-08

Preamble

REEEP’s objective is to achieve a greater use of renewable energy and energy efficiency globally in order to deliver social, environmental, and economic benefits. The objective, priorities, and metrics that follow are designed to provide an overarching structure for REEEP’s activities in its two-theme focus: finance and policy & regulation. All REEEP’s activities, including its support for projects will follow this framework. While REEEP gains more experience with programmes, from the next programme cycle onwards REEEP will try to pilot initiatives to work proactively and directly with governments through its partners and regional secretariats, to develop and implement projects that support the programme priorities and objectives. Support to replication and scaling up of successful REEEP projects financed in 2005 will also be piloted. These initiatives will be achieved through changes to the programme processes and through dedicated funding streams.

Business & Finance Priorities 2007-08

Investment is a fundamental element in the development of RE and EE. With underlying policy and regulatory support, these markets can be accelerated through targeted finance facilities and the increasing attraction of mainstream investment as risk management approaches and acceptable returns become well established. Objectives Regional and national issues will influence priorities but key activities for REEEP to support are seen as those that address:

• The provision of finance, noting the demand for microfinance and pre-development / seed capital for smaller scale developments;

• Active participation by domestic and regional investors, financial institutions

and capital markets, recognising the need to provide targeted training and support and the benefits of networks that connect all market participants;

• The opportunities for bundling of project investments to provide adequate

scale that will attract finance;

• Mechanisms for mitigating or managing investment risk;



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• The specific needs for financing of energy efficiency / ESCOs;

• The opportunities that exist to access finance available through carbon market

mechanisms;

• The value and importance that income generation plays in energy delivery within rural and/or smaller scale developments;

• The review and dissemination of information that supports these objectives in

enhancing access to investment Metrics In line with the objectives, support will be provided to help deliver the following outcomes, recognising that such outcomes may occur beyond the period of REEEP’s support:

• The establishment of at least two new or enhanced financial facilities for RE and EE implementation

• Demonstrable increased engagement of local financial institutions in the RE

and EE market or commitment to engage following targeted training and support for national and government finance sectors

• Documented successes in bundling projects for financing through

conventional and/or carbon finance mechanisms

• Support the establishment and ongoing activities of at least two national or regional networks that draw together the finance and developer communities and enhance access to investment and project implementation

• Active dissemination of information on the value and success of RE and EE

investments, and linkages to the carbon market, through media, appropriate forums, workshops and conferences.

Policy & Regulation priorities 2007-08

Favourable policy and regulatory frameworks are key to the greater uptake of renewable energy and energy efficiency. REEEP aims to stimulate policies and regulatory mechanisms, that facilitate renewable energy and energy efficiency, through activities with key stakeholders – intergovernmental organisations, national



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and local governments and regulatory bodies - at three key stages of the policy process:

• Policy awareness and promotion – increasing knowledge and understanding of polices and regulatory mechanisms that facilitate renewable energy and energy efficiency and promoting their take up through dissemination activities and events

• Policy development – providing support and capacity building for policy design through: assistance with writing primary and secondary legislation, codes of practice etc and the review of such instruments

• Policy implementation – providing support and capacity building through: guidance on how to implement legislation and sharing experience on implementation issues

Objectives

• Sustainable energy (renewable energy, CHP/cogeneration and energy efficiency) licensing, connection agreements and charges, standards, codes of practice, labelling, planning guidance etc, particularly as they affect newer and smaller participants - main focus on policy development and implementation

• Other energy efficiency issues such as demand side management (DSM), white certificates, measures to encourage behavioural change

• Media and stakeholder awareness and alliance building including public participation, accountability and governance issues

• Inter-governmental (global and regional) policy development and implementation – leveraging existing international policy mechanisms and processes

• Sharing information on policies and regulatory mechanisms, including good practice and lessons learned, particularly activities that involve collaboration with existing relevant REEEP initiatives (e.g. REEGLE, REIL, SERN)

• Establishing and enhancing relationships and joint working with potential and existing partners, for example on resource assessments, the integration of sustainable energy into energy planning, developing sustainable energy communities, data sharing etc

• Addressing implementation issues in countries and regions that have designed policies and or regulatory mechanisms to facilitate renewable energy and energy efficiency but where there is more to be done to enact and implement them effectively, particularly through sharing implementation experiences within and between regions



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• Review and revision of policies and regulatory mechanisms within individual countries and regions that have been in place for some time, to assess their effectiveness in stimulating renewable energy and energy efficiency and to recommend and/or design improvements

Metrics

• Having substantial engagement with governments on the development of licensing, standards, connection agreements, codes of practice, labelling, planning guidance for sustainable energy in at least three regions

• To be formally engaged in the energy planning process in at least five countries

• To undertake effective policy awareness/promotion activities for local and/or national government officials and/or regulatory agency officials in at least 3 regions

• To work with governments to contribute to the development and/or implementation and/or review/revision of policies or regulatory mechanisms in at least 5 countries



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Annex B

REEEP DONOR OBJECTIVES

The REEEP donors for the current call for proposals are the Governments of Norway, United Kingdom, Ireland, Italy and New Zealand.

Government of Norway Objectives and Priorities

Norway’s objectives The achievement of the MDGs is being threatened by climate change. It is therefore necessary both to reduce greenhouse gas emissions and to implement climate change adaptation measures. Measures that reduce emissions of greenhouse gases often lead to considerable local health benefits. Poor people are the most vulnerable because they lack the necessary resources to adapt to climate change and because their value creation is largely based on natural resources. Increased investment in low-carbon technology, improved energy efficiency and increased use of renewable energy are of key importance in addressing these challenges. Energy is essential for both social and economic development. Providing better access to reliable energy services at prices that are affordable to poor people is crucial to achieving the MDGs. Simple, decentralised solutions will play an important role. According to the action plan for environment in development cooperation Norway intends to:

• provide assistance for energy resource mapping, analyses of energy use, development of regulatory frameworks and system design with respect to the most promising renewable sources of energy

• support the development and use of renewable energy, including biomass, wind and solar energy

• support the development of small power plants in conjunction with solutions that address water supplies, flood mitigation and agricultural irrigation

• support measures designed to improve energy efficiency • Support measures to reduce the negative health effects resulting from the use

of biomass for household energy purposes • Promote multilateral initiatives in the field of renewable energy

Norway believes that REEEP is consistent with the aims of the action plan and will support REEEP in efforts that promote greater uptake of renewable energy and more



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efficient use of energy to help address climate change and improve access to clean energy. The main aim is to undertake a concerted programme of work, which increases international and regional collaboration in the energy sector in support of Norway’s action plan for environment in development cooperation. Norway’s priorities Priorities are China, India and Brazil. Projects from African LDC can also be supported.

Government of the United Kingdom Objectives, outcomes and priorities

Key Objective To promoting greater uptake of renewable energy and more efficient use of energy to help address climate change, enhance energy security and improve access to clean energy.

The main aim is to undertake a concerted programme of work, which increases international and regional collaboration in the energy sector in support of the UK's climate change and energy objectives in a manner that is compatible with REEEP's programme priorities as agreed by the REEEP Programme Board.

United Kingdom Outcomes Four main outcomes are envisaged:

(i) Acceleration in the global use of renewable energy and energy efficiency technologies, particularly in rapidly industrialising countries and major oil producing countries in the developing world;

(ii) New strategic dialogues and capacity building with key countries which will positively impact on international action to tackle greenhouse gas emissions;

(iii) Improved access to energy for in particular for those beyond the current reach of the national grid;

(iv) Support to the Gleneagles Plan of Action's recommendations on promoting renewable energy and energy efficiency (including energy efficiency in buildings).

United Kingdom Priorities REEEP projects can be in any country in the world but the top priorities for the UK are China, India, Brazil, South Africa, and Mexico. A limited number of projects may



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be supported elsewhere if it can be demonstrated that they could contribute significantly to REEEP's overall success.

The UK is also wishes to ensure that there is an adequate balance between projects dealing with finance and those dealing with policy & regulation. Given that the majority of projects funded by REEEP so far have been related to renewables, the UK wishes to see the majority of funding going to projects dealing with energy efficiency.

Government of Ireland Objectives and Priorities To promoting greater uptake of renewable energy and more efficient use of energy to help address climate change, security of supply considerations, as well as and improved access to clean energy.

The main aim is to undertake a concerted programme of work, which increases international and regional collaboration in the energy sector in support of Ireland's climate change and energy objectives in a manner that is compatible with REEEP's programme priorities as agreed by the REEEP Programme Board.

In line with Irish Overseas Development Aid, the contributions from Irish government enable REEEP to support projects in Eastern and Southern Africa. The Irish support to REEEP is an important contribution enabling the partnership to have a development component, thus balancing REEEP’s portfolio of activities. Irish support for REEEP has been conducted through an interdepartmental collaboration between the Department of Environment, Local Government and Heritage and the Department of Communications, Marine and Natural Resources (through Sustainable Energy Ireland, its energy agency). This type of cooperation shows the importance placed on sustainable energy issues by the Irish Government. The priority countries for implementation Ireland are Ethiopia, Lesotho, Mozambique, Tanzania, Uganda and Zambia. Projects from other African LDCs can also be supported. Government of Italy Objectives and Priorities To promote greater uptake of renewable energy and more efficient use of energy to help address climate change and improve access to clean energy services in Southern Mediterranean countries.

The main aim is to undertake a concerted programme of work that increases and strengthens international and regional cooperation on sustainable energy in the Mediterranean basin. This is according to Italian policies and objectives on climate change, renewable energy and energy efficiency, and sustainable development, in a manner that is compatible with REEEP's programme priorities as agreed by the REEEP Programme Board.



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Italy Priorities The priorities for Italy are Algeria, Egypt, Libya, Morocco and Tunisia. Government of New Zealand Objectives and Priorities

Demonstrate success in bundling projects to an adequate scale to attract financing through conventional and/or carbon finance mechanisms; or,

Facilitate the provision of micro finance for smaller scale renewable energy and/or energy efficiency developments in the least developed countries in the Pacific.



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Annex C:

Analytical and Synthesis Study of REEEP Programmes

Objective Carry out an analysis of the outputs and outcomes of the REEEP projects, capture the learning and gauge the contribution of these projects towards RE and EE market development. Projects to be covered All the REEEP projects that have been supported by REEEP in the third, fourth and fifth project cycles and the strategic activities/projects that have been supported. REEEP will provide a list of all projects after the pre-qualification stage. Approach of the Study The study based on an analysis of the outputs and outcomes from REEEP supported projects will develop a synthesis study to develop the ‘Big-picture’ from REEEP projects, examining the following aspects: 1)What are the contributions that REEEP has made in the four areas of Policy, Regulation, Business and Finance to develop the markets for RE and EE; 2)Which of the efforts have succeeded and which have failed, what are the lessons to be learned from these experiences for market development of RE and EE; 3)Develop five case studies based on selected examples of successes and failures and the lessons from a RE and EE market development perspective; 4) What have been the catalytic and follow-on effects of REEEP project outcomes, if any, in the RE and EE markets? 5) What are the existing and emerging best practices, if any from the projects that REEEP has supported? 6) What are the lessons that are particularly relevant to renewable energy sector and energy efficiency sector respectively? 7) What has been the contribution qualitatively and quantitatively of the project outcomes towards the REEEP goals? Report and layout The study report should be given an appropriate title and should be of about 25 pages, including a 2 page executive summary. REEEP would have full rights of reproduction of the report. The report should use graphs, graphics and photographs to make the report easy and interesting to read. The report should quote project implementing organisations and beneficiaries and will also feature a foreword from REEEP donors. The study report should be professionally visualised and laid out. 500 hard copies printed in recycled paper should be delivered to REEEP along with an electronic version.



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Qualifications Organisations who would carry out the project for REEEP should have significant years of experience in carrying out research, analytical and publishing work relating to renewable energy and energy efficiency demonstrated by past activities and publications. The organisation should have been in existence for a minimum period of 5 years. Timeframe It is expected that this project will be carried out during the period July 2007 to June 2008.



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Annex D:

REEEP Report on Energy Efficiency

Objective Carry out research globally focussing on the key markets for energy efficiency globally, geographically and sector-wise and provide and up-to-date characterisation of the market, policy, stakeholders and initiatives. This report would refer and build on existing work on energy efficiency and compliment on-going efforts avoiding duplication. This report is aimed at energy efficiency policy makers, industry, financiers and development professionals. Geographic Focus The geographic focus could be OECD countries and the emerging market economies of Brazil, China, India, Mexico and South Africa and other important countries where major energy efficiency activities are underway. This report would refer and build on existing work on energy efficiency and compliment on-going efforts avoiding duplication. Sectors to be covered The study should cover both thermal and electrical energy efficiency and the sectors to focus on are: Demand Side Energy Efficiency: Industry, buildings, agriculture, transportation, utility DSM programmes, standards and labelling programmes. Supply side energy efficiency: Supply side energy efficiency at generation plants and in energy transportation and distribution. Information to be Reported

Market Potential; Investments in $; Energy efficiency installations; Annual energy efficiency savings; Countries with energy efficiency policies and programmes. Types of current energy efficiency policies and programmes and their impact

on the market; Listing of the major stakeholders from government institutions/agencies,

financial institutions and banks, industry and NGOs who are active globally in energy efficiency. This listing should also include the contacts;

Listing of the key initiatives/projects globally, regionally and nationally in energy efficiency along with details as a brief case study format.



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The report should provide the current status closer to the publication date but not older than 31st December 2007. Report and layout The REEEP Report on Energy Efficiency 2008 should be of about 30 pages, including a 2-to3 page executive summary and with minimal amount of descriptive text. The report should use graphs, graphics and photographs to make it easy to read. Any supporting and detailed documentation can be as a separate supplementary report. The REEEP Report on Energy Efficiency 2008 should be professionally visualised and laid out and 1000 hard copies printed in recycled paper should be delivered to REEEP along with an electronic version. The supplementary report should be provided as an electronic copy. REEEP would have full rights of reproduction of the reports. Qualifications Organisations who would carry out the project for REEEP should have significant years of carrying out research, analytical and publishing work relating to energy efficiency demonstrated by past activities and publications. The organisation should have been in existence for a minimum period of 5 years and should be able to demonstrate formal research linkages with organisations in all the key target countries. Timeframe It is expected that this project will be carried out during the period July 2007 to September 2008.



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Annex E:

Design and Establishment of a Risk Mitigation Mechanism

Objective Provide support to a project in a REEEP priority country that will establish a risk management mechanism to mitigate the risks associated with RE and/or EE investment. Background Many banks and financial institutions in REEEP priority countries perceive investments in renewable energy and energy efficiency as risky. There is also limited risk mitigation options available in the market for risk mitigation such as insurance policies, guarantee funds or risk transfer mechanisms that cater to RE and EE projects, enterprises and products. This has been a major barrier to renewable energy investments by conventional banking and financial institutions. This barrier assumes significance in the context of major investment initiatives in the anvil such as the World Bank’s Investment Framework for Clean Energy and Development and the European Commissions Global Energy Efficiency and Renewable Energy Fund (GEEREF). REEEP had specified establishment of a risk mitigation mechanism as a priority since its 3rd programme cycle but was not able to support any projects under this priority due to a lack of responsive proposals. Currently there are also investment possibilities such as the REEEP would therefore like to commission a project that would specifically target this priority. Project Summary The project purpose would be to establish a risk management mechanism in a country with a mature financial market and institutional framework, with high levels of private sector investments in RE & EE, addressing the investment risks for RE and EE projects and enterprises. It is possible that the project could focus on one investment sector alone - energy efficiency or renewable energy. It is expected that the following activities will be carried out by the project: 1) An assessment and quantification of risks associated with RE and/or EE investments in projects and enterprises in a selected target country; 2) Assessment of the existing options and possible alternatives to mitigate the risks – the assessment should specifically consider the use of guarantee funds and insurance instruments.



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3) Selection of the most appropriate mechanism for the situation through a logical process, taking into account the existing body of global and local experience; 4) Piloting and implementing the risk management mechanism in collaboration with a financial institution or an insurance company. Linkages to the World Banks investment framework for Clean Energy and Development or the GEEREF would be welcome. 5) Development of a report describing the experience, key lessons and conclusions for dissemination to REEEP partners. Outputs, outcomes and Impacts 1) The project outputs expected are a pilot risk mitigation mechanism and the report on the experience. 2) The project outcome expected is for actual investments in RE and/or EE to be made using the risk mitigation mechanism. 3) The project impact expected is a tangible increase in the RE and EE markets as a result of the mechanism/facility. Qualifications Organisations who would carry out the project for REEEP should be financial institutions or insurance companies or financial or economic research establishments in partnership with financial institutions or insurance companies. It is expected that the implementing organisation or partners have a track record in RE and/or EE investments. The organisation(s) should have been in existence for a minimum period of 3 years. Timeframe It is expected that this project will be carried out during the period July 2007 to September 2008.

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