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ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
Green Mini Grids Market Development Programme
Dr. Daniel-Alexander Schroth
Coordinator SE4ALL Africa Hub - AfDB
ECOWAS Sustainable Energy Policy & Investment High Level Forum
SESSION 12: Triggering Investment in Clean-Energy Mini-Grids
16 September 2015 Golf Hotel Abidjan , Côte d’Ivoire
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
Few facts on Energy Access in SSA
1. Access to electricity increasing, but not enough to achieve universal access by 2030
2. Between 2010 and 2012 – in urban areas access growth exceeded population increase by 25 million; in rural areas, it fell short by 23 million (GTF)
3. Only 15 % of current rural habitants are connected to electricity (GTF)
2012 2020 2025 2030 2035 2040
300
600
900
1 200
1 500
1 800 Million
Population withelectricity access
Population withoutelectricity access
Source: IEA 2014
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
By 2030 66% of all unconnected
people will be in SSAPopulation without Access
Source: GTF, 2015
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
By 2040 – 70% of new rural demand
in SSA will be from off-grid and mini
grids...
Source IEA, 2014
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
...two thirds of which powered by
renewables
35%
47%
12%
4%2%
Off-grid: 12 TWh
32%
37%
20%
8%3%
Oil
Solar PV
Hydro
Wind
Bioenergy
Mini-grid: 26 TWh
Technology mix for mini-grids & off-grid in sub-Saharan Africa, 2040
Source IEA, 2014
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
High Impact Opportunity - HIO
• Strong Case for the development of clean mini grids to achieve universal access in rural areas.
• A High Impact Opportunity for Clean Mini Grids has been created by SE4All, to promote the coordination of actors and advance actions.
• Members of the HIO include amongst others ARE, EUEI-PDF, UNEP, USAID, DFID, GIZ, AfDB, ECREEE, Private companies, foundations and NGOs.
• The HIO produced a mapping of support providers and programmes for clean mini grids.
• HIO members were involved in the consultation process for the GMG Market Development Programme
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
Context
DFID – GMG Africa regional Facility
Sustainable Energy Fund For Africa (10m GBP)
Country Programmes
ESMAP Action Learning And Evaluation (5 m. GBP)
SE4ALL Africa HUB
Market Development Programme
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
GMG Market Development Program
• Implemented by the SE4ALL Africa Hub in collaboration with SEFA.
• In the framework of SEFA Component III, Enabling Environment.
• A mix of internal staff and advisory services.• Designed with a consultative process with SE4ALL
stakeholders, the HIO participants, expert and practitioners.
• Reflects the areas of intervention established by the HIO and actively collaborates with some of the HIO partners on its implementation
• Multi – phased: to assure greater degree of flexibility to adapt to the changing landscape, closer coordination with partners and gradual take-off in parallel with increasing internal implementation capacity.
• Learning form the experience of Lighting Africa
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
MDP objectives
Removing or reducing market barriers and strengthening the ecosystem for the scaling-up of GMGs investments in Sub-Saharan Africa
How?
• Promoting a pan-African network of expertise on Green Mini Grids;• Ensuring coherence with SE4ALL Action Agendas and Investment
Prospectuses;• Strengthening capacity of developers to develop / operationalize GMGs
business models; • Engaging project financiers and supporting the development of suitable
financial solutions;• Promoting a sound policy and regulatory environment; • Providing an interface with leading sector participants and groups
(including the HIO Secretariat, development partners, private sector industry associations and civil society organization).
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
Market Development Programme
Barriers / Business Lines
Barriers Identified
1 . Early stage market fragmentation
2. Lack of proven commercial business models
3. Inadequate regulation, policy gaps or uncertainty
4. Human Skills, Institutional capacity issues and lack of standardization
5. Lack of access to affordable longer term finance
Business Lines
1. Market Intelligence
2. Business Development Support
3. Policy and Regulatory Support
4. Quality Assurance
5. Access to Finance
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
Partners / Beneficiaries
• Project Developers: Public institutions (like public utilities, rural electrification agencies, local institutions), Community or private developers, Public Private Partnerships (PPP).
• Customers/Communities including anchor clients (e.g. telecoms), Businesses(e.g. local MSMEs), and community customers (i.e. households and public services).
• Governments, Regional Institutions, Public Sector involved in the preparation of laws, regulations, codes and standards for quality assurance, legal frameworks.
• Business/ Industry Associations – involved in supporting and representing their members through advocacy, research, networking and events.
• Financial Institutions involved in the provision of risk, equity and debt capital for GMGs projects, as well as risk-mitigation instruments. This includes private investors, local commercial banks, development finance institutions and governments.
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
1. Market Intelligence
OBJECTIVE: Foster the ability of project developers and energy planners in identifying market solutions for decentralized provision of energy services.
PARTNERSProject Developers, Public Entities
ACTIVITIES: First Implementation Phase: 1 - An evaluation of the methodologies and best practices available for assessing GMG potential;2 - The creation or choice of an opportunity assessment methodology in order to generate comparable data across countries; 3 - The publication of country-level analysis on mini-grid market opportunities, initially focusing on 5 countries in Sub-Saharan Africa that are prioritising GMGs.
Subsequent Implementation phasesFocused networking events and further methodological work on market intelligence areas as needed, including productive uses and identification potential energy sources.
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
2. Business Development Support
OBJECTIVE: Support project developers for project identification, preparation and financial closure.
PARTNERSProject Developers, Customers/Communities
ACTIVITIES: First Implementation Phase: 1- Developers’ support needs survey 2- Set-up of tailored on-demand advisory services that will include both desk-help and in situ missions. These services will provide advice to project developers on a series of issues including financial structuring, fundraising agenda, government interface, human resources, institutional capacity, and community engagement.
Subsequent Implementation phasesContinuation of advisory services, dissemination of developer guides, technical and financial support for the start-up of GMG organizations, set-up of a GMG mentorship scheme, creation of a “GMG Africa Awards”
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
3. Policy and Regulatory Support
OBJECTIVE: Reinforce regional support and political backing, provide regional policy reference.
PARTNERSGovernment, RECs, African Union
ACTIVITIES: First Implementation Phase: Development of a GMG Africa Strategy containing a set of principles on GMGs to be adopted by the AU. The objective is to raise the profile of GMGs amongst African Governments and provide a strategic framework and impetus to the scale-up of GMGs in Africa.
Subsequent Implementation phasesAdvisory services on policy and regulatory matters to national governments and public institutions and related orientation and capacity building activities
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
4. Quality Assurance
OBJECTIVE: Reinforce standardization and quality control.
PARTNERSRegulators and Industry associations; RECs, Rural Energy Agencies
ACTIVITIES: This Business Line will not start immediately.
Subsequent Implementation phases- Assistance for policy support for regional approaches to GMGs quality standards and
codes of practice in collaboration with Regional Economic Communities/Power Pools, Regional Regulators and Rural Energy Agencies.
- Capacity building services for Industry Associations and national standards laboratories to develop suitable technical and performance standards of GMGs equipment, labeling as well as codes-of-practice in installation, maintenance and financing.
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
5. Access to Finance OBJECTIVE: This business line is focused on overcoming the dearth of competitive and adequate financing options for GMG projects.
PARTNERSFinancial Institutions, Project Developers
ACTIVITIES: First Implementation Phase: 1. A supply-side scoping, including review and analysis of existing public and private
funding and technical assistance facilities operating in the energy access domain in Sub-Saharan Africa, their terms, and their limitations;
2. A demand-side analysis, including financial simulations of different project types, mini-grid financing needs and potential returns, and a collection of case studies;
3. Expert and stakeholder interviews on a Financial Intermediation/Support Initiative for GMGs, and initial recommendations on such initiative.
Subsequent Implementation phasesDepending on the outcomes of the first phase, financial intermediation initiative, training for commercial financing institutions and networking with local institutions.
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
Timeframe
Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016
GMGsMarketDevelopmentProgram
MarketIntelligence
BusinessDevelopementSupport
PolicyandRegulatorySupport
Accesstofinance
Projectdesignworkfor2ndphaseofMarketDevelopmentComponent
ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
GMG country support programmes
SEFA has set aside an indicative budget of USD 5 million to support enabling environment interventions in a first batch of 5-6 African countries to unlock private investments in GMG.
These are to be country-specific programmes that are intended to support the GMG-related priorities identified in the SE4ALL Action Agenda process.
The specific areas to be addressed are defined based on need by applicant countries, and can span across sector planning, regulatory and policy interventions and market development and coordination work.
Selection process: EOI launched in June – deadline on the 1st July 2015 Strong response : 20 EOIs submitted Key criteria include alignment with SE4ALL AAs, market potential, and relevance of
interventions Evaluation ongoing by SEFA technical committee – will be completed shortly 5 to 6 African countries to be selected for SEFA grant request processing in 2015-16
AFRICAN DEVELOPMENT BANK
Contact:
Dr. Daniel-Alexander Schroth
Mr. João Duarte Cunha
Mr. Andrew Carter,
Thank you!