April 2015 Sustainable Energy Finance Update
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In April, the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), European Commission, European Investment Bank (EIB), Global Environment Facility (GEF), and World Bank announced sustainable energy financing for projects in Argentina, Germany, India, Kenya, Morocco, Mozambique, Myanmar, Pakistan, Poland, Portugal, Sri Lanka, Tanzania, Tunisia, Turkey, the Pacific and West Africa.

Several of these institutions also released related publications or reached milestones in their sustainable energy efforts.

april_2015_sustainable_energyApril 2015: In April, the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), European Commission, European Investment Bank (EIB), Global Environment Facility (GEF), and World Bank announced sustainable energy financing for projects in Argentina, Germany, India, Kenya, Morocco, Mozambique, Myanmar, Pakistan, Poland, Portugal, Sri Lanka, Tanzania, Tunisia, Turkey, the Pacific and West Africa. Several of these institutions also released related publications or reached milestones in their sustainable energy efforts.

In Argentina, the World Bank approved US$200 million for the Renewable Energy for Rural Markets Project, which will install solar panels, mini-networks, wind systems, solar water heaters and stoves in rural communities, benefiting an estimated 725,000 people. [World Bank Press Release]

In Germany, the European Commission announced fiscal support of €29.3 billion for 20 offshore wind farms in the North and Baltic Seas. The projects, which range in size from 252-688 megawatts (MW), will help Germany reach its 2020 target for renewables and increase competition in the German generation market. [European Commission Press Release] [AA Energy News Terminal Press Release]

In India, the Government, the GEF and the World Bank launched a US$47 million Partial Risk Sharing Facility for Energy Efficiency (PRSFEE). The GEF is contributing US$12 million in addition to US$6 million in technical assistance and capacity building; CIF’s Clean Technology Fund (CTF) is backstopping the Facility with a US$25 million contingent guarantee. The Facility will help reduce risks associated with demand side energy efficiency projects, increasing the appeal of commercial investment in energy efficiency projects. [GEF Press Release]

In Kenya, the World Bank is supporting the Government, Kenya Power and Lighting Company (KPLC) and the Rural Electrification Authority (REA) with an International Development Association (IDA) credit of US$250 million, an IDA guarantee of US$200 million and a US$7.5 million grant from the Strategic Climate Fund-Scaling up Renewable Energy Program (SREP), for a total of US$457.5 million. The funds will be used for infrastructure investments to increase access to electricity and improve the quality of power for existing customers, as well as provide technical training. [World Bank Press Release]

In Morocco, the World Bank is supporting the country in reducing its dependence on imported fossil fuels through the Clean and Efficient Energy Project. The US$125 million World Bank loan and US$23.95 million CTF loan will support the construction of 75 MW of solar photovoltaic (PV) capacity and installation of time-of-use meters, which will improve reliability and affordability of electricity. [World Bank Press Release] [World Bank Project Webpage]

In Mozambique, AfDB’s Sustainable Energy Fund for Africa (SEFA) approved a grant of US$740,000 in technical assistance for the country’s feed-in tariff regime for small/medium renewables projects and for setting up a mini-grid regulatory framework. The grant will aid in capacity building, awareness raising, creating environmental and technical regulations, and crafting guidelines for investors, grid connectivity and power purchase agreements (PPAs). [AfDB Press Release]

In Myanmar, the World Bank endorsed the 2015-2017 Country Partnership Framework (CPF), which will focus on reducing poverty by increasing access to basic services, including extending new or better access to electricity to 3.5 million people over three years. CPF will make US$1.6 billion in credits, loans and grants available to the country. [World Bank Press Release]

In Pakistan, the World Bank’s International Finance Corporation (IFC) and the China Three Gorges Corporation are partnering to support hydro, solar and wind power projects to boost generation capacity by 15%. The IFC will invest US$125 million in a subsidiary of the company, which is developing US$7 billion of renewable energy projects in the country. [IFC Press Release]

In Poland, EBRD has launched a €250 million Sustainable Financing Facility for Leasing, which will target small- and medium-sized enterprises (SMEs) that are implementing energy-saving solutions. The Facility will make leases available for investments or the acquisition of equipment, light commercial vehicles, trucks and trailers. [EBRD Press Release]

In Portugal, EIB has signed two agreements with banks that will on-lend the EIB financing to SMEs and midcaps that are investing in small-sized projects, including in renewable energy, environmental protection, and research and innovation. The first loan for €200 million was signed with Caixa Económica Montepio Geral (Montepio) and the second for €300 million was signed with Novo Banco. [EIB Press Release, Montepio] [EIB Press Release, Novo Banco]

In Sri Lanka, ADB is providing Hatton National Bank (HNB) with a US$100 million infrastructure loan consisting of a direct loan of up to US$75 million and a B-loan from financial institutions of up to US$25 million. HNB, which is one of the largest lenders in the renewable energy sector, will invest the funds in priority areas, including energy. [ADB Press Release]

In Tanzania, CIF approved a US$4.75 million SREP Mini-Grids Project to be administered by the IFC. The project will support Tanzania’s rural electrification goals by: developing market requirements and intelligence for mini-grids; supporting mini-grid pilot projects; developing a Transaction Advisory Services Facility; and enhancing knowledge management and dissemination. [CIF Document Page] [Project Proposal]

In Tunisia, AfDB has granted a €49.4 million loan to supply natural gas, as a form of less-polluting and more affordable energy, to disadvantaged regions. [AfDB Press Release]

In Turkey, the IFC’s Financial Innovation for Renewable Energy (FIRE) Program was approved by CTF. The US$17.75 million programme, which will also receive US$550,000 for project implementation and supervision services, will provide non-recourse project financing for renewable energy developers to demonstrate the effectiveness of project finance in the sector and encourage commercial lenders to expand the financing options available. [CIF Document Webpage] [Project Proposal]

Also in Turkey, İşbank joined the Turkey Residential Energy Efficiency Financing Facility (TuREEFF), borrowing US$75 million from EBRD and CTF to increase the residential sector’s investments in energy efficiency improvements. Recipients of İşbank’s on-lending will be able to use the funds for upgrades in thermal protection, heating efficiency, domestic hot water supply, air conditioning, and lighting and white goods. Financing will also support the development of renewable energy systems in buildings. [EBRD Press Release]

In the Pacific region, CIF approved the Sustainable Energy Industry Development Program, allocating US$1.92 million in grant funding and US$445,000 in project supervision and implementation services. Under the Program, ten Pacific Island countries will receive assistance in resource mapping for solar and wind capacity, as well as planning and managing the integration of variable renewable energy. [CIF Document Page]

In West Africa, the World Bank is providing a US$200 million IDA credit for a regional transmission network to enable electricity trade between the countries of The Gambia, Guinea, Guinea-Bissau and Senegal. The project aims to decrease the region’s dependence on oil-based thermal generation and to capture the power of such resources as Guinea’s 6,000 MW hydropower potential. [World Bank Press Release]

On publications, ADB released a report, titled ‘Unlocking Indonesia’s Geothermal Potential,’ that examines the constraints to developing Indonesia’s geothermal resources and recommends creating a new tariff regime, improving the tendering process, re-negotiating PPAs and using new modes of financing and project de-risking. [ADB Publication Webpage] [Unlocking Indonesia’s Geothermal Potential]

AfDB published its 2014 Development Effectiveness Review on Energy, which finds that 14 million Africans over the course of 2009-2013 have gained improved electricity access as a result of AfDB efforts on the continent. The Review considers the overall efficacy of the Bank’s energy portfolio and operations, as well as ways to improve its work in the energy sector. [AfDB Press Release] [Development Effectiveness Review 2014: Energy] [IISD RS Story]

On initiatives, IDB announced the 2014 IDEAS Energy Innovation Contest winners, which will each receive up to US$100,000 for projects related to energy efficiency and renewable energy in Latin America and the Caribbean. Out of the 282 proposals received, one winner in each of six categories was selected; the projects chosen were: sustainable social housing in Guatemala; micro hybrid grid in rural Peru; solar-powered river transport in Ecuador; sun shining condominium in Brazil; ecological biomass stoves in Haiti; and flexible energy loads for grid balancing and societal co-benefits in Nicaragua. [IDB Press Release] [IISD RS Story]

With the support of UN Secretary-General Ban Ki-moon and World Bank President Jim Yong Kim, senior government officials and chief executives from major oil companies launched the ‘Zero Routine Flaring by 2030′ initiative this month. The company and country endorsements of the initiative thus far represent 40% of global gas flaring. According to the World Bank, current flaring “results in more than 300 million tons of CO2 being emitted to the atmosphere…. If this amount of associated gas were used for power generation, it could provide more electricity…than the entire African continent is consuming today.” [World Bank Press Release]