2.5 from adaptation planning to action - finance & project perspectives (j.rijke)
TRANSCRIPT
From adaptation planning to action Finance and project perspectives dr. ir. Jeroen Rijke CAMINO End Conference, Antwerp, 25 March 2015
From adaptation planning to action
Many challenges to turn strategies into action:
– Political sense of urgency – Cultural – Institutional – Skills & competencies – Technical – …
– FINANCIAL
© CRC for Water Sensitive Cities 2012
Melbourne, Australia
© CRC for Water Sensitive Cities 2012
Hamburg, Germany
© CRC for Water Sensitive Cities 2012
Rotterdam, Netherlands
‘Mainstreaming’ the new dominant approach?
© CRC for Water Sensitive Cities 2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011.7
2013.4
2015.1
2016.8
2018.5
2020.2
2021.9
2023.6
2025.3
2027
2028.7
2.0
3E+
03
2032.1
2033.8
2035.5
2037.2
2038.9
2040.6
2.0
4E+
03
2044
2045.7
2047.4
2049.1
2050.8
2052.5
2054.2
2055.9
2057.6
2059.3
2061
2062.7
2064.4
2066.1
2067.8
2069.5
2071.2
2072.9
2074.6
2076.3
2078
cumulative ratio of building stock at EELS yearly addition
Deltares & UNESCO-IHE, 2010
© CRC for Water Sensitive Cities 2012
Example: Fish migration river Afsluitdijk
© CRC for Water Sensitive Cities 2012
Who’s running the marathon?
© CRC for Water Sensitive Cities 2012
• Recognition of opportunity
• Identification of scope, requirements & constraints
• Assessment of added value / business case
• Agreeing on financing & organisation
• Identification of contracting & realisation requirements
• Identification of maintenance & operation requirements
Mainstreaming from the perspective of projects
Different perspectives on adaptation projects
Adaptation from the perspective of planning/engineering:
Maximise societal values, such as safety, liveability, prosperity
Minimise risk of damage and fatalities
Adaptation from the perspective of financing
Maximise return on investment
Minimise risk of negative/insufficient return on investment
Renewable energy: increasing investment, declining dependence on subsidies
Frankfurt School - UNEP Centre & BNEF (2014)
Can financial instruments for renewable energy be applied to urban water?
?
Typical financial risks of geothermal energy projects
Besselink et al, 2014
Phase of project
Fin
anci
al r
isk
Low
High
Initiation & design
Realisation Operation and maintenance
Possible to finance
Difficult to finance
Financiers for geothermal energy projects
Besselink et al, 2014 Phase of project
Fin
anci
al r
isk
Low
High
Initiation & design
Realisation Operation and Maintenance
Bank
Supplyers guarantee
Development Fund
Pension Fund / Reinsurer Guarantee
Subsidy
ROI required
No ROI required
Exploitation subsidy
Water projects are fundamentally different
Besselink et al, 2014
Phase of project
Fin
anci
al r
isk
Low
High
Initiation & design
Realisation Operation and maintenance
Possible to finance
Difficult to finance
• Non-monetizable benefits
• Avoided damage • Split incentves
REVOLVING FUNDS
Financial instruments – some examples
Stimulating private investment through co-funding Proven technology Proven business case Willingness to invest Availability of public funds
GRANT SCHEMES SERVICE CONTRACTING
FEED-IN SCHEMES
Compensation for unused capacity (upfront/continuous) Quantifiable benefits Co-funding capacity (upfront compensation) Long-term commitment (continuous compensation)
Private investor taking over service provision Idem as feed-in schemes + Ability of service provider to attract finance and manage risks during exploitation
Venture capital for private investments Non-bankable projects Innovative technologies Entrepreneurship Approx 8% annual return on investment
Why?
Requires e.g.
Zomerhofkwartier (ZoHo), Rotterdam
Water plaza
Polder roof
Streetscape greening
Source: de URBANISTEN, 2014
Combi of public funds
Public funds + Service
contracting
Grant + feed-in
+ service contracting + revolving funds
Other findings from ZoHo, Rotterdam
• Thus far, limited funds from outside area attracted.
• ‘End users’ are driving force behind transformation.
• Thinking in local value chains stands central.
Conclusion
1. Overcoming financing hurdles may be difficult, but feasible. Despite the differences, the renewable energy sector can provide
useful lessons.
2. Private sector investments can only be expected for projects that generate (indirect) return on investment. For example: Increase attractiveness of entrance to office buildings Compensation for green roof’s water storage capacity Using demonstration projects as a showcase for businesses
3. Successful projects emerge from opportunities. Adaptation requires opportunistic thinking through a perspective
of projects.
THANK YOU! dr. ir. Jeroen Rijke [email protected] +31 6 150 86 275